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Chosing Partner Clients in Start-up’s Growth Stage

It’s a good situation for a start-up to have built a product / service and have some live / beta client(s) to work with. If proven, the offering could be expanded further to work for more clients as well as diversify into other potential growth areas. This is an interesting stage for a start-up when they have “semi-proven” product, hand full of beta clients and potentially a few more clients interested. This is a commendable position for the start-up, but a fairly challenging one as well. Its tempting to work with all clients, and try to meet all their requirements at once with a limited team size, trying to support and scale the half baked product. Selection of clients to work with is not a frequent choice that start-ups get, but if they do, they must consider a few important factors:

Your team’s bandwidth is limited. you cannot make all clients happy and it is not constructive to thinly spread your team across too many requirements. While you should build the clients pipeline for the near term, but you should prioritize and focus your team’s efforts on a selected clients who are the best potential partners. You can judge whether the client is a good partner or not by,

Size – typically, larger the client size, tougher it maybe to work with them. While larger can be great references if successful, but such clients typically have the ability of wasting small firm’s time and resources, their terms maybe too favoured towards them benefitting if your start-up takes off, they may not be able to decide quickly (being large organizations) and actually end up destroying the start-ups. (Also, you should not underestimate the value you bring to larger firms who tend to be not so good at innovation and tend to be slow moving) At the same time, smaller clients may not be ambitious enough to drive newer initiatives. You are likely to find the sweet spot clients in mid size range with clients who want to grow and value the start-up partner firms.

Money – any clients willing to put money for proof of concepts are likely to be interested in your proposition which also makes them more serious in the engagement.

Sharing the vision – it helps to have some resonance for the future vision with your clients. If they are too closed minded and focused on immediate benefits / slight cost reduction, etc. then they may not be really helpful.

Competition – some clients maybe aligned with your competitors, so be careful around dealing with them.

High maintenance – try and estimate if these clients will be high maintenance because of lack of skilled teams within their own organization. It can be daunting task to support various teams within the client’s organization if they cannot manage such support internally.

Appreciation for your efforts / products – some clients are never happy with any vendor / business partner. If possible, anticipate and avoid such clients. because start-ups expect clients to be patient they work through various issues expected in newer products. Once your start-up breaks even and / or you get adequate funding, you will be able to widen and review your target client list again.

PS: this blog is written with enterprise software start-ups in mind, may not be fully applicable for some other product / business types.

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