It is no secret that the COVID-19 pandemic has made business unusual. Whether in large companies or startups, there is a struggle to remain fully operational amidst the decreased market demand for products and services. During the pandemic, enterprises were surviving and not thriving. With COVID-19 cases rising once again as new variants spread, pushing the government to tighten restrictions even further, how long can business owners endure this seemingly endless cycle?
No one is in the same boat. Large companies have the capital and the market access to get by. However, it may still be a challenge for these large, often traditional corporations, to innovate their products and services. On the other hand, startups, while inherently innovative, lack the resources to reach markets and access investments to scale. This presents an opportunity for corporations and startups to work together.
I have experienced this firsthand. We founded a tech startup in 2014 to provide big data recommendation services to e-commerce websites. We provide cost-effective, turn-key solutions that enable our clients to engage their target market and maximize business. Since then, we have had the opportunity to partner with large companies and learn from them.
The corporation-startup partnership phenomenon is not exactly a new idea. It’s one of the best practices for businesses in the United States and Europe. Take the Pfizer vaccine for example; not everyone may be aware of the partnership between big pharma Pfizer and German startup BioNTech. It began in 2018 when the two teamed up to develop mRNA-based vaccines for the flu. The startup brought their technical expertise to the table, while the seasoned pharma brought their years of experience developing and delivering vaccines. Their partnership proved to be successful as we see their COVID-19 vaccine rolling out across the world.
Coca-Cola is another large company that partnered with two startup entrepreneurs in the US to co-create an on-demand stocking platform. They partnered with Wonolo to streamline their restocking processes, enabling the consumer packaged goods company to reduce their losses by billions of dollars. Wonolo, on the other hand, raised $5.7 million in their Series A round.
In the Philippines, we have yet to see more of these stories, although the idea is not alien. Unionbank of the Philippines, for one, has worked with Singapore-based startup GoBear and Indonesia-based Brankas.
In my experience, collaborating with large companies allows us to look at a problem through a different lens. At one point, we realized that our services were not scalable nor defensible. Our market size was quite limited, and revenue growth was non-existent since our clients were only interested in paying a fixed monthly fee. Our services were not defensible since our technology is based on open-source software that other tech-savvy companies can replicate. Luckily, one client came to us one day and asked if we could provide a rewards feature in their future product release. It was a lightbulb moment that led us to pitch the idea to banks and potential investors quickly. In a few weeks, we got commitments, and suddenly our startup had a clear direction to scale. This experience made me realize as an entrepreneur the value of collaborating with large companies. Our startup found a better problem to solve and grew at a faster rate.
The World Economic Forum (WEF) also observed these benefits in corporation-startup partnerships in Europe. WEF published a white paper in 2018 highlighting how these partnerships enabled corporations to access external innovations. Companies became more open to an entrepreneurial and agile culture that allowed them to stay on top of market developments and discover new revenue streams. On the other hand, startups gained market knowledge and mentoring, access to proprietary assets, and, most importantly, investment opportunities.
Most startups will not have the collaboration opportunity I described; I believe we need a bridge to make it happen. PhilDev Foundation, our non-profit which supports Filipino startups, recently announced the JumpStart Program, and we are looking for companies who are interested in pioneering this collaboration opportunity in the country. Honestly, if my startup had access to a program like this, we could have saved a lot of time.
My experience is just one story. I am excited to see more Filipino startups growing and thriving. During these uncertain times, bayanihan is crucial. Beyond competition is a call for collaboration. Large Filipino companies should work with Filipino startups; Filipinos should help Filipinos. – Rappler.com
Dr. Eric Tomacruz is the Founder and CEO of FindShare, a white-labeled cashback and rewards program platform provider in the Philippines that leverages big data analytics. Dr. Tomacruz also sits as the Executive Vice Chairman of PhilDev Foundation.