Case Study: How innovative startups outsmart partnership hurdles, and the role consultants play in their success
- The emphasis on partnerships often focuses on best practices, but the potential pitfalls and how to handle them practically are sometimes left out of the conversation.
- We look at where partnerships between established FIs and startups often hit roadblocks, and how startup partnership heads can navigate these and lock in key alliances. We also explore the role of consultants in this equation.
Partnerships between established financial institutions and innovative startups are gaining recognition as a key strategy for driving growth. While the emphasis on partnerships often focuses on best practices, the potential pitfalls and how to handle them practically are sometimes left out of the conversation.
These partnership pitfalls can be external or internal. Managing the external ones entails creating a roadmap for alignment with the prospective partner while ensuring internal harmony within the firm, which can greatly impact the partnership’s results.
We look at where partnerships between established FIs and startups often hit roadblocks, and how startup partnership heads can navigate these and lock in key alliances. We also explore the role of consulting firms like Pacemakers as intermediaries, and how they assist their financial clients in identifying the right partnership fit to support their digital transformation efforts.
The external considerations
To kick things off, nailing the timing is a must
Something as simple as timing, says Alessandro Hatami, managing partner at Pacemakers, can derail collaborations between incumbent banks and fintechs.
Hatami’s career spans several decades and includes nearly a decade as a managing partner at Pacemakers. Earlier, he held the position of Director, Large Merchant Services UK at PayPal and went on to become the Chief Operating Officer for Lloyds’ digital bank in 2011.
“There are several [pitfalls], but one important one is from the side of the corporate not realizing that the time matters to the smaller firm,” shares Hatami in a recent Tearsheet Podcast episode.
When large firms engage with smaller ones, they often find themselves on different timelines. If a corporate enterprise takes too long to lay the groundwork for a partnership with a transitioning small business, it can stifle that firm’s development. Meanwhile, larger companies may get bored and seek other opportunities if the process feels prolonged. This initial phase is pivotal, according to Hatami, where many partnerships fail primarily due to timing mismatches and a lack of understanding of the innovator’s viewpoint regarding their larger counterparts.
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