How Can Corporates Better Understand Startups?

Why must corporates truly understand how startups work?

If a company wants sustainable results from its open innovation system, it needs long-term, trusting relationships with startups. That requires first understanding how startups actually work, and what problems they face in daily life. Startups are not miniature corporates. They do not have the same capital buffers, brand power, or organisational redundancy. Their survival depends on fast learning cycles, rapid access to customers, and timely payments. Treating them like standard suppliers or small business customers ignores the specific dynamics of high-growth, high-uncertainty ventures.

Our interviews show that founders quickly distinguish between corporates that have prior startup experience and those that do not. Experienced partners tend to have dedicated innovation or startup units, clearer processes, and more realistic expectations. In contrast, companies that have never worked with startups usually have low awareness of open innovation and are simply not ready to collaborate. They underestimate founders’ constraints, overestimate their own attractiveness, and often unconsciously damage startup business dynamics through slow, opaque, or one-sided practices.

How do startups usually approach large companies?

Most startups meet corporates in structured environments: trade fairs, accelerators, incubators, innovation programmes, and industry events. Some founders use their personal networks to gain introductions, while others cold-email or contact corporate managers on LinkedIn. Technology startups trying to reach large organisations typically target departments such as R&D, business development, investment, IT purchasing, or any unit that could be a direct user of their solution.

When they succeed in reaching top management through their networks, senior leaders often redirect them to “relevant departments”. From the corporate perspective this seems logical. From the startup side, however, this redirection can feel like being dropped into a maze with no map. Founders frequently report that after an encouraging contact at the top, they end up in middle layers that neither have budget nor clear mandates to work with startups. The core challenge is not merely “meeting corporates”; it is finding the right internal sponsor and navigating complex structures before cash or momentum runs out.

What goes wrong when corporates misread startup dynamics?

Startups report sharply different experiences with corporates that have never worked with them before. In many of these firms, R&D or technical teams react to proposals with a “we could build this ourselves if needed” mindset, a classic expression of the “not invented here” syndrome. Others insist on sticking with familiar solutions, even when dissatisfied, because switching to a startup feels riskier than contracting a well-known large brand. For managers who must justify decisions to their boards, choosing a famous supplier is easier to defend than betting on a new, unknown venture.

Even in companies that dohave prior startup experience, problems persist but change in nature. The most common frustration becomes the absence of feedback. Many corporates engage intensively during the proposal phase, then go silent. Calls and emails stop being answered, sometimes after months of discussion. For startups, this silence is not just rude; it is strategically damaging. They need positive or negative feedback to improve their solutions and decide where to invest scarce time and resources. In parallel, some founders observe a paradox: certain corporates allocate significant budgets to far-away, “fashionable” international startups while remaining distant towards local ventures in their own ecosystem.

Confidentiality is another frequent pain point. Startups describe meetings where information flows almost entirely one way—toward the corporate. Some companies invite founders mainly to extract technical knowledge or update themselves on the state of the art, without a genuine intention to collaborate. Worse, a few organise sessions where multiple competing startups present in the same room, inadvertently exposing trade secrets to rivals. Finally, confusion between “startup” and “supplier” creates new tensions. Corporates sometimes expect startups to behave like mature manufacturers: accepting large orders with tight deadlines or agreeing to become exclusive providers that cannot sell to other customers. For a startup, such exclusivity can kill scalability and make the company unattractive to investors.

Which behaviours and practices do startups value in corporate partners?

Despite these problems, founders also report very positive experiences with certain corporates. The single most appreciated behaviour is clear feedback. Even when a decision is negative, startups value companies that explain why and provide constructive comments. This helps them refine their offer, better target future prospects, and avoid wasting resources on misaligned markets. Corporates that have dedicated innovation or startup units are also perceived more positively. Specialists who understand startup realities, route opportunities to the right internal teams, and manage expectations on both sides save founders significant time and frustration.

Preparation before meetings matters as well. Startups notice when a company arrives with a clear idea of what it wants, how it sees a potential collaboration, and which next steps are realistic. Conversely, “exploratory” meetings where the corporate has done no homework often end in vague conversations that lead nowhere. Founders also appreciate transparency about process: they want to know how long it will take to receive feedback, at which stage confidentiality agreements will be signed, what the typical collaboration journey looks like, and how payment terms work. Some corporates go further by offering technical mentoring, sharing exhibition space at international fairs, or giving controlled access to labs and test environments. These actions signal that the company genuinely wants startups to grow, not just to extract value from them.

How can companies design fair, startup-friendly processes and financial terms?

A core expectation from startups is equal treatment: they want to be treated like other commercial partners, not subjected to harsher conditions simply because they are small or young. One recurring problem is unpaid Proof of Concept (PoC) work. Some companies still assume that startups will run PoCs for free, in return for the “privilege” of working with a big brand. Founders increasingly reject this. They argue that even PoCs that do not lead to full sales should be paid at the agreed price, because they require time, effort, and opportunity cost.

Startups also struggle when corporates demand references, long sector track records, bank guarantees, or when payments arrive months after work is completed. These requirements reflect standard supplier logic, not startup reality. A more balanced approach is to adapt legal and procurement processes specifically for startups. Cross-functional internal groups can be tasked with simplifying approval flows, designing startup-specific NDAs and collaboration agreements, and creating faster, lighter payment models. Some companies successfully use mechanisms such as upfront partial payments, milestone-based fees, or success-linked bonuses, especially in PoC projects. Another critical factor is budgeting. When business units are encouraged to work with startups but have no dedicated budgets, discussions stall. Corporates that reserve specific funds for startup collaborations progress faster and are perceived as more trustworthy partners.

What should a startup-oriented communication strategy look like?

Building a sustainable relationship with startups is also a communication challenge. Messages on your website, in meetings, and at events should actively encourage founders to contact you. Startups respond positively to corporates that explicitly recognise their importance for the sector’s future, explain their innovation focus areas, and emphasise that they have simplified and accelerated internal processes for startup collaborations. They also appreciate clear promises—such as routing all startup requests to a specialised unit, guaranteeing a response within a defined number of working days, and ensuring they will be directed quickly to the right internal experts.

After the messaging, startups need a door. Corporate websites can be easily adjusted to make this door visible. 

Many companies create dedicated pages for startups, similar to those they maintain for suppliers. Placing a “Startups” or “Innovation Partners” heading on the homepage, ensuring that searches for terms like “innovation” or “entrepreneurship” return relevant pages, and offering simple contact forms all help. Encouraging startups to register and share basic information, even when no immediate collaboration is possible, allows the company to build a long-term startup database. Over time, this database becomes a strategic asset: it supports future scouting, invitations to ecosystem events, and ongoing communication with promising ventures. When a startup’s first interaction with your company is efficient, respectful, and well-organised, founders will share that story across the ecosystem—strengthening your reputation as an experienced, startup-friendly corporate partner.

Key Takeaways

• Startups are not mini-corporates. Their risk profile, time pressure, and funding dynamics require tailor-made collaboration models.

• Negative experiences cluster around attitude and process. “Not invented here” reactions, silence after      proposals, confidentiality issues, and supplier-style expectations all damage trust.

• Positive experiences are driven by clarity. Structured feedback, dedicated startup units, prepared meetings, and transparent timelines earn long-term goodwill.

• Fair financial and legal terms are non-negotiable. Paid PoCs, simplified contracts, faster approval flows, and realistic guarantees are key to sustainable startup collaboration.

• Communication and access matter as much as contracts. Clear messages, visible contact points, and a well-managed startup database turn your organisation into an attractive partner in the ecosystem.

FAQ

Why do startups insist so much on feedback?
Because each “yes”, “no”, or “not now” helps them refine their product, target the right markets, and manage scarce resources. Silence blocks learning and wastes time.

Is it wrong to ask startups for exclusivity?
Long-term exclusivity is usually incompatible with startup growth and investor expectations. If exclusivity is essential, it should be limited in scope, time, and geography, and fairly compensated.

Do we really need startup-specific processes?
Yes. Standard procurement and legal processes are built for mature suppliers, not fragile ventures. Adapting them shows respect for startup realities and makes collaboration practically feasible.

References

• OECD, reports on business innovation and entrepreneurship ecosystems.

• European Commission, guides on corporate–startup collaboration and open innovation.

• Harvard Business School, case studies on startup–corporate partnerships and innovation processes.