It’s (Not) All about the Money
Different Opportunities are Available for Startups (that aren’t an investment)!
The early stages of a startup’s life cycle typically focus on securing funding and investors. Having enough capital to support one's startup is undeniably essential, however focusing too much on increasing capital might lead to missing out on other opportunities that could become future success. Below are four opportunities that startups can pursue that will not only better their business but also raise their evaluation and skills in doing so.
1. Collaborations with Corporates Here are some benefits to working with a corporate:
A startup working with a corporate will enable validating its product: the product/solution will be used and tested over time with the credentials of a large corporate, and the startup will most likely be able to receive comments and criticism from top management and engineers
Collaborations create a success story to others: this startup was able to work with a large business and provide value.
Corporate collaborations are one of the best avenues for a startup to grow: they are demanded to scale up their product and utilize new distribution channels. Furthermore, the startup has immediate access to advice and reactions about its product, from a reliable source.
While scaling up and adapting to a large corporate, the startup gains experience and expertise about the market that improves their business and attracts future investments.
Additionally, the startup could be confronted with a new problem or use of its product that can improve their conception of their business.
Since we’re dealing with big companies, It will probably take a while for the collaboration to start after preliminary meetings: according to our experience, it takes around 6-8 months from the first meeting until a collaboration is established.
Before looking for your next collaboration, it’s important to understand the strategic objective you aim to solve, what value you’re bringing and what problem you’re solving. However, it’s also important to remember that some changes or compromises might be necessary to take into consideration. Since we’re dealing with big companies, It will probably take a while for the collaboration to start after preliminary meetings: according to our experience, it takes around 6-8 months from the first meeting until a collaboration is established.
A collaboration is mutually beneficial to both parties. New technology aids the corporate to compete and disrupt their target market, making it a great opportunity to pursue.
2. POC (Proof of Concept)
Far too often, startups are so focused on landing a big-brand partner that they drop everything to make the collaboration happen. Furthermore, startups that rush to get a corporate often neglect a gap between the corporate’s expectations and the startup’s abilities.
A POC helps solve this issue while still creating a connection with a corporate.A POC serves as a test project between you and a corporate to evaluate the technology/solution and determine if it can enable a collaboration. This can bring tremendous value to your startup: it builds experience and provides insight on how to work alongside large businesses.
Although a POC is not binding to have a collaboration afterwards, it can still lead to partnerships, licensing agreements, and investments.
If you are familiar with the startup ecosystem then you have heard about accelerators and incubators.
Accelerators have intense training and development in a single period lasting 3-6 months.
Incubators are ongoing and are less oriented on the immediate build up of the startup.
Currently, there are over 200 active accelerators in Israel. Approximately half of them are sponsored by a large corporate in order to screen and develop new technology in their industry, and are focused on the business aspect of a startup and not the creation of the product.
Accelerators mentor the startups to quickly grow through intensive training and business development. Typically, a startup coming out of an accelerator will have improved skills in pitching, understanding of their target market, and detailing their value proposition. Graduating from an accelerators creates credibility for the startup that attracts investors and corporates; it’s not binding, but a sponsoring corporate may also be interested to deepen the relations with participating startups after (or during) the acceleration period.
Highlighted Accelerator: Barclays Accelerator Powered By Techstars
At the end of an accelerator, each startup pitches to potential investors in a large event called the Demo Day. Recently, the Samurai team attended the Barclays Accelerator Powered By Techstars Demo Day. Due to the fact that this accelerator is run by Barcalys, it specifically focuses on startups that has relevance to financial institutions: payments, cyber security, capital market technology, etc. The Barcalys accelerator lasts for 3 months and has a 6% equity cost, however the ability to learn from a leading player in banking and business is worth it for these startups.
4. Active Investors
Earlier in this post we mentioned that a startup should not only focus on receiving the greatest amount of money: it is also possible to opt for investors that bring expertise and connections (rather than the most money). Often times, startups may want to pursue the aforementioned categories (PoC, Collaborations etc’) but don't have the contacts to get in touch with the corporates.
This is where a strong investor base serves the startup greatly.It is important that startups find people that will advocate on their behalf and have connections and business experience to help create the right pathway for them, rather than the individual or group that offers the most money.
Samurai Investments Here at Samurai, we view ourselves as a strategic investor. We invest in startups where we see relevancy to the Japanese economy, and where we feel we are able to provide added-value.
If a startup becomes one of our portfolio companies we not only provide hands on strategic advice but also use our Japanese corporate connections to create POCs and collaborations whenever possible and relevant. Our knowledge and involvement in both ecosystems allows us to bring the Israeli cutting-edge technology to Japanese corporates – and helping Japanese corporates penetrate the Israeli ecosystem and find suitable collaborations and opportunities within it.
Are you a startup looking for an investment? Apply here.
Read more about our innovation activities with Japanese Corporates.