Building Bridges, Not Walls: Building a win-win Relationship between Corporates and Startups in Africa

In Part 4 of this series, I delve into cultivating a win-win relationship between the incumbent corporates and emergent tech startups in order to build a prosperous future for the African tech industry.

What are the inadvertent harms caused by the traditional corporate-startup engagements? What is the untapped potential that corporates are missing out on by not properly engaging with startups? And most crucially, what are the best practices that can turn corporates into genuine ecosystem builders?

Section 1: Corporate Practices that Harm Start-ups — A Closer Look

How can corporates support the nascent technology industry in Africa? First, Do No Harm.

While corporates may extend a hand of collaboration to startups, it's essential to understand that these larger entities sometimes, by commission or inadvertently, end up doing more harm than good. We break down the nuts and bolts of how exactly this happens:

Delayed Decisions

Startups are usually running against the clock. When a corporate takes 6 to 9 months to make a decision on a proposal or a project, it isn't just a delay — it's a death sentence for startups. Imagine a startup founder who spends half their limited runway waiting for an email back. The result? An empty office, a disbanded team, and a potentially groundbreaking idea that never sees the light of day.

Bureaucracy

Startups can't afford the time or the personnel to wade through dense legal jargon. Every moment spent waiting for an NDA to clear legal is a moment not spent improving their product. For a startup, what seems like 'routine paperwork' for a corporate is often a draining, almost existential struggle to stay afloat.

Idea Appropriation

Imagine a startup investing months into perfecting a pitch, sharing proprietary information in the hopes of collaboration, only to find out the corporate decided to implement their idea without them. This doesn't just result in financial loss but erodes trust across the startup ecosystem.

Barriers to Entry

Picture a young startup with a cutting-edge cybersecurity solution. They're excluded from even presenting to a corporate because they lack specific industry certifications, even though their solution might be more innovative and cost-effective than those of established players. These barriers can stifle innovation and discourage startups.

Preference for Large Suppliers

There's comfort in the familiar, and corporates often resort to what they know — large, international suppliers. However, by doing so, they're unknowingly snuffing out the local entrepreneurial flame. This favoritism limits the growth of the local startup ecosystem, keeps innovation at bay, and ultimately, stagnates the industry.

Payment Delays

Many startups operate paycheck-to-paycheck, or in business terms, invoice-to-invoice. When a corporate decides to apply a 90-day payment policy on a startup project, it's akin to asking a sprinter to run a marathon without any prep. The startup’s financial health deteriorates, affecting its ability to serve other clients or even survive.

By understanding these pitfalls, corporates can take the first, crucial step toward nurturing a symbiotic relationship with startups, thereby propelling the entire tech ecosystem into a future rife with innovation and opportunity.

Section 2: The Hidden Costs — What Corporates Stand to Lose through Poor Engagement

It's not just startups that pay the price for poor engagement; corporates also risk losing out in several critical areas. Here are the often-overlooked consequences:

Loss of Innovation for Corporates

Imagine being a corporate leader and watching a competitor catapult ahead because they adopted an innovative solution you passed up. When corporates don't engage with startups, they aren't just saying no to a pitch; they're saying no to fresh perspectives, agile solutions, and the possibility of transformative innovation.

Stifled Growth for the Tech Industry

Consider the ripple effect when corporates keep their doors closed to startups. Funding dries up as investors seek more promising ecosystems. Pilot projects, which are often the lifeblood of startup innovation, become scarce. The result is a tech industry that plateaus, lacking the dynamism that comes from collaborative success stories.

Economic Impact

The broader economy also suffers. Each failed startup is a missed opportunity for job creation, economic development, and even exports in the case of universally applicable solutions. When corporates don't engage productively with startups, they aren't just affecting a single entity; they're putting brakes on national and even continental economic progress.

Reputation Risk

Reputation is currency in the business world. When word gets around that a corporate is difficult to work with or worse, known for appropriating ideas, the most promising startups will think twice before engaging. This erodes the corporate's own capacity for innovation and may significantly impact long-term competitiveness. There are a number of corporate entities in the industry who are fighting to right the wrongs of this repetitional risk that has resulted in startups avoiding to engage with them. Once trust is lost, it's difficult to gain it back.

Missed Market Opportunities

In today's fast-paced business environment, market opportunities can appear and vanish in the blink of an eye. Corporates who choose not to engage with startups risk missing these fleeting chances. Whether it's a first-mover advantage in an emerging market or an innovative solution that could revolutionize a legacy system, the opportunities missed today can turn into a competitive disadvantage tomorrow.

Understanding the costs of poor engagement isn't just an academic exercise; it's a clarion call for corporates to rethink their approach to startups and, by extension, their own future.

Section 3: A Practical Roadmap: Six Ways Corporates Can Fuel Africa's Tech Industry

Engaging effectively with startups isn't just a good idea—it's a business imperative. Here's a robust, adaptable model for corporate engagement, teeming with tangible action points that can be cherry-picked to match corporate objectives:

i) Be the Gateway: Establish Open Platforms for Startup Engagement

By appointing a specialized liaison for startup interactions, corporates can ensure streamlined, efficient communication channels. This liaison would be empowered to fast-track engagements and give critical feedback in real time. They would act as an "interpreter," translating startup dynamism into corporate strategy.

Don't stop at people; create technological platforms. Open APIs and developer sandboxes allow startups to plug into your systems effortlessly, rapidly testing and iterating solutions that can add value to your core business.

ii) Time is Money: Facilitate Quick Decision-Making and Payments

In startup life, decisions need to be made yesterday. Adjust your internal bureaucracy to this reality. Use lean decision-making processes that can yield a 'yes' or 'no' quickly. And once the decision is made, accelerate contract finalizations and payments. Every day that a startup has to wait for a payment is a day taken off their runway. You can extend that runway by being more prompt.

iii) Take a Seat in the Front Row: Sponsorships and Industry Event Participation

When corporates sponsor startup-focused events or host demo days, they aren’t just buying a seat at the table—they are creating the table. Not only does this provide startups a platform to reach you, but it also enables your teams to get an early look at emerging tech trends and solutions.

iv) Test the Waters: Launch Internal Startup Programs

Think of internal incubator or accelerator programs as innovation labs, where promising startups can fine-tune their models under your mentorship. These settings create win-win scenarios: corporates can tap into innovative solutions, and startups get a controlled environment to test their products and extend their runways through potential investments.

v) Build the Ecosystem: Supplier Inclusion and Local Project Allocation

Creating an inclusion mandate for a percentage of technology suppliers to be local startups isn't just social responsibility—it's smart business. By earmarking internal projects that could be spearheaded by local startups, you're directly nurturing the tech ecosystem you may one day rely upon.

vi) It Starts at Home: Foster a Corporate Culture that Supports Startups

Incentives matter. Reward staff for successful collaborations with startups. Let this be championed from the highest echelons of your corporate structure, with CEO-led initiatives that prioritize fair and ethical startup engagement.

In Conclusion

The symbiotic relationship between corporates and startups is too crucial to be left to chance. As giants in the business ecosystem, corporates have both the resources and the incentive to ensure the health and growth of the nascent African tech industry. By adopting some or all of these strategies, corporates won't just be helping startups survive; they'll be ensuring their own long-term innovation and growth. The choice is not between helping startups or helping oneself—the two are inextricably linked.

I trust that this concrete roadmap offers an actionable guide for corporates to engage effectively with startups, especially within the unique challenges and opportunities presented by the African tech landscape.