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Baystartup Industrial Cooperation: SMEs as Startup Customers and Partners

When it comes to cooperation between startups and industry, Baystartup has positioned itself as a player that is primarily known among startups for its contacts in the German investor scene. We wanted to learn more from Baystartup CEO Carsten Rudolph and Christoph Rommel, Head of Industry Cooperations, about the role Baystartup can play for industrial companies and about the success factors for good cooperation between startups and SMEs.

Munich Startup: Why does it make sense for companies to cooperate with startups?

Carsten Rudolph Baystartup
Carsten Rudolph, CEO of Baystartup (photo: Baystartup)

Carsten Rudolph: There are many reasons – one main reason is certainly that industrial companies are constantly working on making sure they are secure for the future. Securing the future is based only in part on existing business and its further development. Following brand new ideas and approaches is of growing importance. That makes it necessary to look beyond the company. For example to institutions such as universities, entrepreneurship centers, research organizations or also networks like Baystartup – contact with these players is instrumental in giving established companies a feel for the startup world and how it works. And, of course, they can also meet good startups early on.

Munich Startup: What major advantage does an established company have compared to a startup?

Christoph Rommel: Established companies have an edge particularly in terms of market access They have established a distribution structure, have a good handle on manufacturing and have contacts in the industry – they also have a company history that they can both look and fall back on. This is where startups generally start from square one and have to break into the market with the right tips and tricks.

Munich Startup: What major advantage does a startup have compared to an established company?

Christoph Rommel, Head of Industry Cooperations at Baystartup (photo: Baystartup)

Carsten Rudolph: The biggest challenge is also the biggest opportunity: Startups don’t have a company or market history yet, which means they have no need to take them into account. They have to find or create their business model first, can concentrate completely on “the new” and have the opportunity to achieve a great deal with cutting-edge technologies. They can deliberately search for niches in the market and aim for those with new opportunities at the right time and be extremely successful. What’s important, obviously, is to talk with partners or potential customers early on to see if the idea actually works.

Partners instead of investors

Munich Startup: To what extent can cooperation between startups and established companies help – or is it more about competition in the market?

Carsten Rudolph: There’s obviously always competition in a market. But almost always there are lots of opportunities to achieve more together. Startups can act as suppliers or as a technology partner to contribute to the innovative strength of SMEs. Contrary to what is often assumed, investments aren’t necessary – the established company is simply a customer or partner. This is where we come in at Baystartup, because the potential that lies in cooperating with startups is still often underestimated.

Munich Startup: Why does Baystartup support cooperation between startups and industry?

Carsten Rudolph: On the one hand, we’ve seen a great deal of interest on both sides. On the other hand, the subject promotes our objective, which is to accelerate the entrepreneurial development of startups. And because we work closely with roughly 500 startups each year in Bavaria, we have a sound understanding of the startup scene in a wide range of industries.

Munich Startup: How do you implement cooperation projects?

Christoph Rommel: We actively bring industrial companies together with the right startups and want to specifically get them interested in collaborating with startups. We’ve developed a service package for industry cooperation that is also geared toward SMEs with less than 1,000 employees. For them, it’s often difficult to hire professionals for the subject of “startups” or to even build their own accelerator.

Munich Startup: Where are the sticking points for startups when working with established companies?

Carsten Rudolph: Apart from big DAX companies, startups usually have a hard time also seeing SMEs as potential partners and to then make contact with them. Moreover, startups’ expectations are often too high, first in terms of how long things take and, second when it comes to the decision-making structures and ways to establish potential cooperation. Just presenting your product doesn’t get companies thinking about what they can do with it in business terms. This is where a startup needs to come up with creative suggestions that are a good fit for the bigger partner’s business model.

Cold lead or hot lead

Christoph Rommel: To make sure startups are well prepared for meeting with established companies, we’ve shifted our entire coaching offer to focus more on cooperation between startups and industry. In our online tutorial “Zusammenarbeit mit Corporates” (Cooperation with Corporates) for example, we share simple tools of the trade, such as how startups can contact established companies in B2B, what customs exist in this context, what established companies generally expect from startups and how startups can professionally prepare for and follow up after contacting companies so it all ideally leads to cooperation or an order being placed. Moreover, we point out which metrics can be used to determine whether its a cold lead or hot lead.

Munich Startup: In your experience, what is needed from companies for good cooperation?

Christoph Rommel: What’s important for me first as a company is to learn more about the startups’ technologies – just like classic benchmarking or competition monitoring. Second, it makes sense to come up with a sound innovation strategy that is based not only on internal innovation, meaning from the company itself, but also on external innovation. Companies need to be willing to try to develop innovations with external partners such as startups. Third, I need to have sufficient resources in terms of staff and finances. The top management team should also be committed to working with a startup. And last but not least, it’s important to take a long-term approach to the subject. Because in the end, I also need to be able to engage with the dynamic structures of startups and to budget in enough time to establish an open company culture with that aim in mind.