Forming strategic partnerships
Forming strategic partnerships can result in many positive outcomes for a start-up, growing or mature company. Here’s a case-study to illustrate how the formation of several strategic alliances created significant value for one of our clients.
Several years ago, an overseas FinTech client of mine had an idea for a novel payment platform in a niche retail sector. They were interested in setting up an operation in the United Kingdom. The problem was that the area was so new even the banking industry was unclear as to how to categorise their technology. In fact, even the powers-that-be did not understand how it needed to be regulated. The payment logistics were also unclear.
A separate challenge was to determine the quickest way to penetrate the market and build a solid foundation that would provide an edge over the competition that would surely arise soon after launching the technology.
We had two key choices: i) to go to market by selling directly into the retail sector, or ii) to go indirectly, by integrating into suitable retail software solutions and letting the Partners’ marketing and sales teams sell the client’s product.
As start-ups are typically overwhelmed with meeting development milestones, hiring staff, raising the next tranche of finance, etc. we had to make several crucial decisions relatively quickly.
To determine a payment process that would suit the client, we implemented market research into how companies in other industrial fields were currently solving their online payment process. It was important that we found a reputable supplier with a solution that was fully scaleable, as the last thing we wanted to do was to solve the payment process for the first year or two and then have to change suppliers and systems in order to scale-up once the no. of transactions/day increased significantly.
By meeting with experts and suppliers in the payments industry and interrogating them, we secured a robust solution that would work at start-up, through to the client becoming a well-established operation.
The second key issue was to determine the best way to penetrate the market. We decided that integrating the client’s solution with other retail software solutions would be the best way forward. It would lead our client to capturing a significant share of the target market, as they would be able to utilise their Partners’ established sales and marketing teams to market their solution too. In some cases, where necessary, the client solution was marketed directly to the end-user (the retail market), with the result of creating new business for the client’s Partners so the alliance benefitted both sides.
An added bonus was that by forming these valuable relationships with strategic partners, the client company became attractive to venture and raised significant investment.
Bear in mind what problems you are looking to solve, and/or benefits you are hoping to create by forming strategic alliances. What type of partner would make most sense for your supply chain, your logistics, and/or for revenue gain. Think strategically about how your company can reduce risk and increase its chances of long term survival and growth. Forming strategic alliances can lead to cross-referrals and a ‘gestalt’ where the sum of the parts is more valuable that the value of each part alone.