All the way back in Lesson #6, we talked about How to Structure Strategic Partnerships. This lesson is about how to pitch prospective business development partners in a way that will capture their attention and increase your odds of closing the deal.
The other day, a startup was telling me about their recent pitch to a prospective business development partner, and her frustration over how they didn’t want to move forward with discussions. I was puzzled, since I saw a relatively good fit between her startup and the prospective partner. I asked her, “What exactly did you pitch to the partner when you pitched the relationship?” She proceeded to tell me all about how she highlighted a summary of her company, all the great features and functionalities of her product and how much a relationship with this partner would really help her business.
I chuckled and said, “I can see why the partner was not interested,” which caused a puzzled look on the entrepreneur’s face. I told her nowhere in her pitch did she talk about the partner’s needs and how this relationship would economically benefit them. Instead of focusing on her quality website features, she should have been talking about how this new relationship can increase the partner’s revenues by 25%, which would get their attention.
Let’s look at a case study. Let’s say your startup makes restaurant recommendations and reservation and you are pitching it to Ticketmaster, the event ticketing business. Don’t simply say, “We would like to add our restaurant finder to your website. Ticketmaster may be skeptical of adding the service of an unproven startup to their website, especially with big entrenched players in the restaurant reservation space, like Open Table. Instead, try the following techniques.
Put on the hat of Ticketmaster and say (i) we are completely unique in our space, as a next-generation service (e.g., you can’t get these services anywhere else); (ii) we power these services for many other partners (e.g., you are not a guinea pig, call our other corporate references); (iii) we have thousands of happy consumers using the service which sing our praises (e.g., so your customers will also be well taken care of); and most importantly, (iv) here is a model I built on how we can credibly build a $100MM restaurant reservation business together, targeting Ticketmaster’s event ticket purchases at the point of sale (e.g., opening up a material new upsell revenue stream and materially accelerating your stand-alone growth curve). If the partnership is material enough, don’t be afraid to offer them an equity stake in your business so they can share in your upside success, which they are helping you build.
Another example is my first startup, iExplore. It built its business on the coattails of a strategic relationship with National Geographic. iExplore was a six month old company that convinced a 112-year-old media brand to make a cash investment and help iExplore to promote and build an online adventure travel business. The deal got cut directly with the CEO, who bought into the vision of National Geographic being in the “travel dream creation” business through awe-inspiring images and iExplore being in the “travel dream fulfillment” business. That would potentially open up a large and material revenue stream for them at exactly the same time they were looking to diversify their revenue streams as insurance against a declining print magazine industry.
If you help solve material problems and open up material revenue streams for your prospective business development partners, that should materially increase your odds of getting a contract signed with these companies. To get their attention, your pitch should not be about you, it should be all about them. The more significant it is to their business, the higher up their organization you should pitch it to grab the attention of the key decision makers.
This article was originally published on RedRocket VC, a consulting and financial advisory firm with expertise in serving the start-up, digital and venture community.
Image credit: CC by Florian Widmer