A strategic partnership is one which is critically important to the core business of both your company and the target partner.
It involves substantial commitment from both sides. The most successful partnership is one which is important to both parties. If your partner is selling your product as an optional component to their product, it may provide them additional revenue, but that often does not make your product important to their business. On the other hand, if your product enables them to enter a new market segment, then the advantage of your product is multiplicative to their revenue rather than merely additive. We specialize in helping to identify these strategic links for partnerships which are valuable to both your company and the partner.
An equity investment is an indicator of the strength with which a partner views your partnership. It can be used to solidify a long term strategic relationship. Another sign of a committed partner is when they agree to expend substantial resources to educate a market which is otherwise not yet ready. We help you to identify these opportunities for strategic partnerships, and help to structure deals which leverage them.
A joint venture between the US supplier and the Japanese partner is another type of strategic partnership, where equity investment in a new corporation is made by both sides. This type of relationship can leverage the resources of both sides in a corporate structure which can be defined so as to fit the strategic trajectory of both parties.
A strategic partnership usually involves more due diligence on the part of both parties, and can take longer to complete than a more conventional relationship. Both parties need to have a strong value proposition for their own company. To achieve success, the value proposition for each party needs to be understood and validated by both parties. This is an area where we provide support in finding the right match in the goals of both sides and helping both to see the perspective of the other.
We can provide advice on which candidates are the best match to your requirements and how to best leverage your assets to achieve a strong partnership, and can support your due diligence efforts.
Process for Strategic Partnership
In some cases, the initial goal of the client is to find a strategic partner. In other cases, we begin by developing a sales partnership or technology licensing partnership, then discover the mutually valuable business opportunities in building a conventional relationship into a strategic one.
We can support our clients in both of these paths.
Development of the strategy is a critical first step. What are the initial goals, and what are the objectives for three years out and five years out? Is it important to establish a presence early on so as to achieve first-mover advantage? Is having a cash-neutral first year important? It’s critical to combine your product and business strategy with market conditions and market demand to have an effective strategy that both achieves your global business objectives as well as which is the most effective for the market, and which simultaneously achieves the business objectives of the partner
In balancing these strategic objectives, we are careful to bring intangible benefits into the equation. We have participated in cases where a strategic partnership announcement from a strong multinational Japanese company has been the key for venture investors in the US to join an investment round. Of course, tangible benefits such as commitments from a partner for product purchases have also been instrumental in increased valuations for the US partner. Likewise, for a Japanese client to achieve partnership announcement with a well-known venture-backed startup company in Silicon Valley can have benefits for the client in its domestic market in Japan.
Once the strategy is defined, we create a list of potential partners who meet the selection criteria we have created. We prioritize this list with you, then approach each candidate. After confirming interest from the candidate, we schedule a series of meetings to visit each of the top candidates. Once again, the initial contact with the target partner is important, but the real value our company provides is the hard work of establishing and building value in the deal with both parties.
The following steps include product and services evaluations mutually – they will be evaluating your support capability and sales programs at the same time you are evaluating their support capability and sales strength. We help to manage this process to not only assure successful evaluations, but also to build value for subsequent negotiations. After the evaluation, the top candidate is selected, and we help you to build a proposal for the strategic relationship. We support you during the negotiations and help guide the process to a mutually beneficial conclusion.