In the last 4-5 years, you could observe an investment boom in B2B startups.
It has become a great business: attract investments, make a product/technology and sell the company to a major technological Empire.
The popularity of this model can be probably explained by the bigger profitability corporations get from these external investments compared with in-house investment in R&D.
But in my experience the process of selling your solutions/technologies to a large corporation is a hell: =) Not only that, the procedure itself takes 6 to 12 months (one contract took me 3 years!), but our “big brothers” also demand pilot versions for FREE.
There is also no guarantee of commercial relations in the case of success: after checking out the pilot made the company could easily sign a contract with another contractor…. or even worse – the manager in charge of the project can resign and then you need to start over !!!
For a startup such practice in the market makes the risks of failure bigger, because instead of using the investment for product development it has to invest heavily in the creation of pilot versions and relationships with corporations.
At the same time this practice is very effective for large corporations as they can save their money on risky R&D in-house.
Of course! Why take the risk, if you can get everything from startups for free? =)
What about investors? Early stage investors into B2B startups basically save tens of millions for corporations with billions in profit: =)
In my practice, I have come up with an optimal strategy of “free pilots”: we create only 1-2 free demos, only for the top brands and ONLY publicly.
All the rest companies could order demos only for money. For a lot of money!
May the force be with us!
Best regards,
v @ vactivity.com
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