Start-ups face cultural challenges in dealing with larger potential partners

Jackie Hutter’s chronicle of the trials of a start-up company is instructive to technology transfer officers and IP managers wrestling with their own invention-to-commercialization issues, especially as she details the conflicting values of a start-up and a larger potential licensee.

There is a disconnect between the start-up and large company with respect to what “innovation” is (see Dow, for example).  “It’s almost like these companies consider innovation to be the result of product development instead of being the process of creating new products.”

Relative risk position is a major difference.  A “wrong bet” on choosing a partner might set a large company back, but it won’t bankrupt them.  A start-up must choose the right partner.

Start-ups must be careful not to be star-struck; they need to fight the tendency to defer to the large, well-branded company in negotiations. And it’s more than possible the big fish is only visiting the pond to learn as much as they can about the technology.

One difference takes some time and sophistication to decipher. Large companies suffer from organizational defects. It’s very possible the start-up may find the right partner company, but the wrong silo or “entry point” into the organization. As Jackie opines, “a company that puts R&D and product development personnel as the point of entry for externally-developed innovations is probably not the right first partner for us.”

(Valuators, investors, entrepreneurs, analysts and private equity pros will benefit from the University Startup Directory, an indexed listing of over 1,000 university start-ups.)