Collaboration With Corporates: How Can B2B FinTech Startups Get Going Faster?

Collaboration With Corporates: How Can B2B FinTech Startups Get Going Faster?

01-Jun-2017 by Edwina Johnson

Lately financial organizations have been evolving, trying to get better at working with early stage external innovation, mainly in the form of startups. Various initiatives have been taken, from reviewing and stripping out lengthy vendor selection processes to setting up departments targeted at innovation or venture investment.  Or by partnering with accelerators like ours to even hiring people who “speak the language of tech startups”. Yet still the process hasn’t been nailed down, and a lot of pain and risk remains for any B2B startup who wants work with these large financial organizations.

During our recent meetups in San Francisco and New York we examined this topic in more detail speaking with financial institutions such as Mastercard and Thomson Reuters, organizations such as CFSI Labs, and a range of B2B startups – from later stage Quovo to Alloy and Startupbootcamp alumni Sandbox.

We’ve highlighted insights from these meetups below in the interest of helping more FinTech startups survive and the financial industry innovate faster. In particular, three main barriers that each side experiences, and how FinTech startups can best approach them.

Finding the right person –
What’s the problem?
From a startup’s perspective, navigating a big company to find the right person with the cash and inclination to work with them is no easy task, in fact we’ve heard startups talk of spending over 4 years finding the right stakeholder! On the other hand, large organizations often suffer from significant staff turnover – losing the startup knowledge and contacts along the way, compounding this problem.

How can you get around this?
Build your network as a startup and use people to help make relevant introductions. Look out for the people with the right titles, but also those individuals from the company who are actively mentoring startups or connecting others around them. If you’re not meeting the right people, try working with organizations who already have the relationships built up and know who to introduce you to – such as ourselves or CFSI Labs.

Our panelists also highlighted the importance of sending updates on your business. Regular updates, including targeted asks, can be great memory triggers for people who meet a lot of entrepreneurs and may forget your business in the crowd. These can also be useful prompts to share your business with different departments – for example if another team has only recently become interested in your use case.

Time to sell –
What’s the problem?
The time it takes from your first introduction to a paid engagement can also take years, which is a big ask for pre-funding startups who only have a finite amount of time and money.

How can you get around this?
The startups we spoke with advised targeting smaller more nimble players to get business in faster, whilst working on the larger players in the background. When you do find your partner organization, keep in mind that the more specific, ring-fenced PoC on well-defined use cases will be easier to start with.

Researching your targets is super important – which financial institutions are known for working with early stage startups? Who has the infrastructure set up to be innovative? What experiences have other startups had with these different organizations?  Then when you start talking to the people internally do even more due diligence on your leads. Does your contact there have the budget or the connections internally to put you in front of a budget holder? Does your contact know the process to actually start working with a startup? Feel comfortable asking these kinds of questions upfront or risk getting “stuck on a slide in a strategy deck”.

However, as a B2B startup you must be prepared to spend anything from 6 to 24 months on average getting a commercial agreement with a large organization. This means you’ve got to make sure you build in more runway than you think you’ll need, both when starting out and when fundraising throughout your growth.

Lastly, keep in mind that it’s not always the right time for a company to explore the problem you’re solving – it just might not be as urgent as other business challenges. Don’t give up, but don’t waste time banging your head on a brick wall either. Keep in contact (regular updates as before), keep the lead warm and you’ll be top of mind when it does come up on their agenda.

Credibility –
What’s the problem?
Credibility becomes an issue as a startup when you’re trying to move up through an organization to people who can sign off on your PoC. An introduction to their boss may seem like a small thing to an entrepreneur, but for an employee the reputational risk involved with young startups feels like you’re putting your job on the line.

How can you get around this?
The FinTech community is small, get known. Internally build your network beyond your contact, making sure there are multiple people in the organization that know about you. Outside, often banks will hear about FinTech startups from other service providers such as lawyers, consultants, etc. Having other people vouch for you is important. Appearing at some of the more relevant and targeted startup competitions and programs can be useful, even if you’re not a winner, as it shows you’ve gone through some selection criteria.

When you do get through to that important meeting ask questions to establish your relevance to that person’s priorities; and if you’re talking to a technology person go straight to the demo as that can be one of the fastest ways to really show what you can do.

 

These are just three of the barriers we discussed during the meetups, and some practical tips on how to overcome them. We highly recommend talking to other entrepreneurs and innovators within these financial institutions to learn from their experiences to help you get going faster!

Finally, a big thank you to Davis Wright Tremaine in San Francisco for hosting us, and Galvanize and Quovo for hosting our meetup in New York. Keep an eye on our newsletter or Twitter feed for our upcoming events!

For more insights from Startupbootcamp about startup and corporate collaboration, read the full Collaborate to Innovate report.

Edwina Johnson

Edwina is Program Director for Startupbootcamp FinTech New York, part of the award winning Startupbootcamp global startup accelerator.