What corporations really want in startups for successful partnerships

Alex Manson, Head of SC Ventures / Photo Credit: Standard Chartered

As technological disruptions sweep through the globe, corporations are finding it increasingly necessary to adapt to the growing needs of their clients.

According to Alex Manson, head of Standard Chartered Bank’s fintech investment arm SC Ventures, traditional financial institutions such as banks “would have a very hard time” meeting clients’ demands quickly without the help of fintech startups.

“Clients are expecting everything to be seamless, instantaneous, nicer, but also cheaper – and I don’t mean 10 percent cheaper, but meaningfully cheaper,” Manson observes. “As an organization, we need to deliver all that, and our partnerships with fintechs help us achieve that.”

Banks, however, aren’t the only ones who benefit from these collaborations. Corporations typically have a large pool of resources and a network of millions of customers that startups can tap into.

“It’s how you go from being a startup to being enterprise-ready,” says Manson. “Once you’re enterprise-ready, you can get to industrial strength and will be in a position to scale.”

What makes a startup attractive to corporations may be different from what makes it appealing to venture capitalists. Here are three things that corporations are looking for when partnering with startups.

1. The maturity “sweet spot”

There are many definitions of what a startup is. Some may say that it’s simply “a state of mind,” while others may call any “small, high-growth company based on a big idea” a startup.

As such, companies at very different levels of maturity call themselves “startups.” Manson says that those from the extreme ends of the maturity spectrum may not be suitable for corporate partnerships.

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“It takes a bit of enterprise-readiness to deal with a large organization,” he says. “Your solution must have the potential to be rolled out globally and you must be in a position to cope with our compliance requirements.”

These requirements relate to laws on data protection and financial crimes, for example – things that younger startups may be unaware of because they’re new in the industry.

The really mature ones may also not be ideal corporate partners for different reasons. Some of them may not even qualify as startups anymore. They’ve become technology vendors, in which case “they’re no longer a candidate for SC Ventures,” Manson points out. These companies would be better off speaking to a corporation’s procurement department which would review and assess their products for the corporation’s needs.

Fintechs that are “enterprise-ready” but still have room for growth are in what Manson calls a “sweet spot.” They are flexible enough to understand what is required in banking, he says.

“It’s that sweet spot where we are able to grow together and learn from each other,” he adds.

2. Client-centric innovation

Corporations and startups alike are driven to succeed because they’re accountable to different parties, from their shareholders to employees.

“Corporates might be overly focused on producing quarterly shareholder returns, while a startup’s goal may be to survive another quarter,” Manson explains. While these goals are equally important, he argues both aspects “are just outputs of what should be your focus, which is to serve clients.” And it is important to have that alignment.

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A strong passion for serving clients, however, isn’t enough to make startups a promising candidate for partnerships, as corporations seek collaborators that are innovative as well.

Citing the example of payment apps, Manson says whether or not corporations would be willing to work with a player in a saturated market depends on how much value-add it provides.

“You have to do something that is an improvement on what we already have,” he says. “That has to be your number one priority, because if you’re not solving a problem or addressing a client need or doing something fundamentally different, then what’s the point?”

3. Embracing reality with an open mind

Innovation and drive fuel startups. For instance, Southeast Asian ride-hailing giant Grab began with an idea to solve an underlying problem with transportation and went through lengths to turn it into reality.

At times, however, it is necessary for startups to figure out their limitations when it comes to working with corporations. Banks, for instance, require startups to go through detailed onboarding processes for compliance purposes which may take a lot of time.

Because of this, Manson says that startups need to do their homework and understand the challenges that corporations face and how relevant their solutions are in that context. Those that know where they stand are valuable potential partners for corporations in any industry.

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“It’s important to understand exactly what you’re dealing with,” says Manson. “Some startups come to us saying they didn’t know we have compliance requirements, but that’s the reality they need to embrace.”

But doing so doesn’t mean giving up. Given the reality, it is crucial to remain “completely open-minded” and to “do what it takes to get to the next level.”

For example, if a fintech startup has a product that’s difficult to understand and use, Manson says that it’s crucial for the founders to “learn, adjust, and improve.”

“With that feedback, you can come back saying that you’ve changed this or that. And maybe by the fifth time, it will work,” he suggests. “We don’t innovate for innovation’s sake. We want to solve real client and business challenges that transform the way we do banking, so it’s important for us to find the right partner who is as focused on this as we are.”

SC Ventures is the fintech investment and ventures unit of Standard Chartered Bank. It aims to promote innovation while developing and delivering digital solutions that work for the bank and its clients.

To learn more about partnerships and collaboration with Standard Chartered Bank, visit SC Ventures’ LinkedIn page or email scventures@sc.com.