Picture this: You meet the CSO of a great deep tech startup at a trade show and have a conversation about their technology. The following week, you send an email that extolls their great approach and an eagerness to learn more. You receive a polite brush-off.
You try again and CC somebody senior in your company to show how serious you are. You don’t even get a reply.
What are they scared of?, you might wonder. Your firm could provide so many resources and could even end up buying the company. Why isn’t the startup responding? It could be that the startup might not be sure if they are ready for you. Sometimes, though, you might just need to make an effort to build trust.
As a tech scout, you run the risk of being perceived by a startup as either too overwhelming or too demanding. An overwhelming request, where you ask for lots of materials, meetings, pilot projects, and more suggest that you don’t understand the startups limitations and are going to drain the startup’s limited resources. A demanding request where you ask startup employees to ‘pick their brains’ about their technology area might trigger a startup’s concerns about intellectual property protection. No startup wants to talk to someone who might be trying to figure our their secret sauce or develop a workaround to their research.
Fortunately, there are best practices that will help you gain a startup’s trust. Before pushing that NDA or suggesting meeting dates, put yourself in their shoes and consider what they want and what they might be concerned about. Next, think about the resources you can offer them.
List 1: What do you bring to the table?
Your resources are enormous. They know it and you know it. However, trotting out that inventory could overwhelm your new partner rather than help them see you as someone who understands their business and perspective.
- Based on what you understand about
the startup’s activity and approach, identify what you think they might be able
to use in the next six months. Limit it to a few items, such as:
- Prototype development
- Scale-up experience
- Equipment that might be useful
- Customers you have for testing
- Map out in a simple diagram where they might fall in your organization, so you can explain access and other coordination efforts.
List 2: What are you seeking?
You need to be basic and you need to be honest.
- Collaboration or joint product development
- Contract manufacturing
- Likely preparatory steps to an acquisition
- Could be any and all of these
- Don’t really know, just want to pick their brain
If your list is emerging, then you’re in a good place. If you’re stuck on (b), keep working on articulating what you want.
Now that you understand what you can bring and what you are looking for, you can start to detail your plan for approaching the startup.
- Review the list of what you want to gain from working with this startup and check it against the list of what you bring to the table. Is it coherent and compelling? If so, keep going. And if not, align these two lists.
- Detail collaborations that you have been involved in. The best examples will be collaborations at your current company that you have personally been involved in. A note of caution: if you discuss an example from a previous employer or one with your current company that you were not involved in, make sure you review what happened and confirm current good standing. Leverage these stories by outlining the positive outcomes for both parties and by explaining key findings from the process. The more you can show the startups that you care about this relationship, the more approachable you will become.
- Go back to the list of what you bring to the table and outline your available resources. Now figure out some kind of unit cost to your company, and come up with proxy for the startup’s value in the market if they could be purchased as services or equipment. In some cases, value may be easier to calculate in time savings rather than dollars.
- Confirm that your set of resources (what you bring to the table) connects with what you want and what you think the startup wants. This bridge of resources – like the waterfall in an economic reconciliation – is what the two sides have to work with: the costs for you and the benefits for them. Keep in mind that these items will not be of identical value to both parties – they are not commodities, after all. However, even if not perfectly symmetrical in the aggregate, there may be enough common ground to justify a discussion that won’t overwhelm your target startup.
You now have a solid plan in place for approaching the startup. Be clear with what you want and what you can bring to the table. By beginning the conversation in a collaborative tone, you will show this startup that you understand their business and that you understand your goals. You will be presenting yourself as a trustworthy and viable partner.