While partnerships offer significant advantages, they are not without substantial [[partnership risk|risks]], especially for startups dealing with much larger companies. A major challenge is the [[impedance mismatch risk]]: a startup's entire operation might be smaller than the administrative staff of a large partner's CEO, leading to misaligned priorities and timelines. Large companies often operate on slower decision-making cycles (e.g., quarterly planning meetings) which can cripple a startup that needs to move with speed and agility; the partner's longest schedule can become the startup's bottleneck. The cautionary tale of Boeing's 787 development highlights how outsourcing critical manufacturing to inexperienced partners, a decision driven by spreadsheets rather than engineering realities, led to massive delays and costs. This underscores that partnerships should be driven by technical competence, customer needs, and quality, not just financial projections.   Another common [[partnership risk]] involves [[unclear ownership of the customer risk]], particularly in [[strategic alliance|strategic alliances]] or [[joint venture|joint ventures]]. Large partners might assure the startup that their extensive field teams will handle customer engagement, but the startup's product could end up as a minor item on a long price list, receiving little attention. [[different objectives risk|Differing objectives]] are also a frequent pitfall; a startup must understand if its partnership is a strategic imperative for the larger company or merely a checklist item for a particular department or individual's career. [[personnel turnover risk|Personnel turnover]] within the large partner organization is a significant, often underestimated, risk. The champion of the partnership within the larger company might be promoted or move to another role, and if the relationship lacks a fundamental strategic rationale for the larger entity, it can quickly dissolve, leaving the startup vulnerable.   [[intellectual property risk|Intellectual property (IP) issues]] can also arise, particularly when dealing with partners in regions with different legal frameworks and enforcement practices regarding IP rights, such as China, Russia, or India. Furthermore, partnership deals that seem attractive initially can become problematic later. As a startup grows and its needs evolve, it might find itself constrained by terms agreed upon when it was in a weaker negotiating position, and unwinding these deals can be difficult. It's crucial to think through the long-term implications of any partnership agreement.   When a large company expresses interest in [[corporate investment risks|investing]] in a startup, it can seem like major validation. However, entrepreneurs must carefully evaluate the motivations and potential downsides. While access to the startup's technology is often a primary driver for the corporate investor, their ultimate objective is to benefit their own company, not necessarily to build the startup into a large, independent entity. Investment deals might come with unfavorable clauses, such as "[[Most Favored Nations clauses|most favored nation]]" status (guaranteeing the investor better terms than any future partner) or lengthy [[exclusivity agreement risk|exclusivity]] periods, which can severely limit the startup's growth potential and strategic options. It's essential to understand the sponsor's motivation within the large company, ensuring it comes from the business side and not just a technology exploration group, and to be prepared to walk away from deals that are not mutually beneficial. Prioritizing substantial sales deals over equity investments can often be a better strategy, as it provides revenue without ceding ownership or control. Next: [[Strategic Partner Engagement for Startups in Early Stage vs. Growth]] Back to: [[Who Will Be Your Key Partners?]]