They’ve become increasingly popular in recent years, driven forward by a need to hold position at the bleeding edge of technological development, but what goes into getting a corporate and startup partnership off the ground?

When financial software company Sage and direct debit startup GoCardless announced the two companies were coming together and launching a new integration aimed at helping customers in the UK and Europe automate payments, Real Business decided to have a look behind the scenes.

Beginning discussions 18 months ago, and with work commencing on the integration at the beginning of 2017, Liz Leigh-Bowler, product marketing manager at Sage, was quick to point out that despite the business now having thousands of employees around the world and a turnover beyond the £1bn mark, it started life as a small company in 1981 – so understands the needs of these size businesses.

“With small businesses, perhaps as they may be resource tight, there’s a great appetite to collaborate closely with third parties,” explained.

“This is when fantastic solutions can be achieved that are truly customer focused.”

Picking your partner

GoCardless VP of marketing, Nicola Anderson, said the business, which has raised nearly £20m of venture capital investment in its six-year lifetime, was attracted to Sage because of the complementary services offered by each.

“GoCardless offers a simple way to automate invoice payment collection via direct debit, which solves the cash flow problem that many of the Sage customers had highlighted they suffer from.”

Partnering up with Sage was not the first time GoCardless had dome something like this – with The Guardian and Thomas Cook two other examples.

The service provided by GoCardless was, as indicated by customer feedback, one which was in demand from Sage users. Leigh-Bowler believes that, whether the partner is large, small or medium, no business can be all things to all customers. “Many simply do not have the capacity/resource to provide every service the customer needs.

“So, collaborating with the right partner, such as GoCardless, allows us to leverage its expertise, experience and knowledge to bring best-in-class to market, which we know customers want.”

The John Lewis way to manage SME-corporate collaboration

Speaking with John Lewis, Real Business has heard how and why the reputable British retailer has embarked on the process of SME-corporate collaboration.

Signing on the dotted line

One of the worries a smaller business may have when it comes to a corporate and startup partnership is the contractual side of things. With Sage and GoCardless, the protections came forth in the legal and contractual agreement. This, Leigh-Bowler advised, should cover clear roles and responsibilities for both parties, agreed liabilities, commercials and commitments/activities we’re obligated to. “It has to work for both parties and it has to be fair,” she added.

To test the effectiveness of the new partnership, two questions need to be answered by Sage. The first is whether the company is providing a service which customer need, want and ultimately use. The second hinges on if the partnership truly provides a win-win-win model for Sage, GoCardless and customers.

“There’s always improvements that can be made in a relationship with an external partner, but as long as you have the clear shared goals and an open dialogue to feed back and improve, you’ll create an effective partnership with a great product for customers to use,” she added.

For any enterprising entrepreneurs keen to tap into the resource might of a big corporate, GoCardless’ Anderson told us it is important to ensure the management team is “extremely clear” on the value proposition for the partnership and the main objectives – how the partnership will support the larger business achieve its goals.

“This needs to translate into a joined-up view in what determines success with shared KPIs,” Anderson said. “Be patient in the partnership discussions as it will involve multiple stakeholders and won’t be a decision made quickly. To support this, make sure you have an internal champion that will really support the partnership and sell it internally to the business.”

Also important is being a good partner, Anderson added, highlighting the benefits of working with a smaller, more agile business by timely delivery of commitments.

From a corporate point of view, Leigh-Bowler recommends SME leaders be open and share passion for their products and the business. When approaching bigger companies with a corporate and startup partnership idea, she suggested picking a partner where there is a product/proposition alignment.

“It can. on occasions, be challenging to get the initial foot in the door to larger companies, but persist. Often the challenge is finding the right person in the business to recognise the opportunity and give the go head,” Leigh-Bowler said, echoing Anderson’s advice on finding a champion.

“Be prepared for it to take time, but many bigger companies, like Sage, are very keen to work with smaller, innovative businesses – they can be incredibly fruitful and rewarding far beyond the bottom line.”

The corporate and startup partnership between Sage and GoCardless is very much seen as a first step for the bigger partner – with Sage indicating “ambitious plans” to expand the GoCardless integration to additional products and markets in the future.

For a small, but fast-growing, company like GoCardless, partnering with a FTSE 100 company may have been onerous to get off the ground but it now provides access to new customers and markets that may have taken years to find.

Have a look at our exclusive interview with Sage CEO Stephen Kelly – who is backing SMEs all the way.