How to Court "Big Corporate" When You're a Scrappy Climate Startup
For climate startups, partnerships with major corporations can be game changing. Such deals can unlock massive revenue streams, validate products, and send demand signals that attract investment.
Courting a big corporate, however, can feel like a daunting task. To demystify the process, Enduring Planet sat down with Alexia Kelly, speaking in her personal capacity as a former climate startup founder and investor.
Before you go, get your 🦆 in a row
Before you try to hook a large corporation, understand the expectations that come with a typical deal. For example, if your venture is at an early stage, a big corporate may issue a pre-purchase agreement or a letter of intent (LOI) that greenlights a pilot if your product can meet specific quality or performance benchmarks by a certain date. However, if those milestones are reached on time, you need to plan to ramp up production quickly which can prove to be a big challenge for teams. If you don’t have the ability to scale your prototype from, say, one to one thousand in a reasonable period of time, you need to set very clear expectations with any prospective corporate partner on Day 1. Overpromising and falling short is a hard thing to recover from.
Getting in the room
Unless you have Fortune 500 CEOs on speed dial, it can be a slog to make inroads with potential corporate customers. A good alternative to a direct introduction is to target the organizations in a big corporation’s orbit; if you can win them over, they’ll connect you with the right people at your target company. A few specific strategies:
- Go after the supply chain: Big corporates work with enormous ecosystems of external vendors. Find a third party supplier that would benefit from your product — even if they’re a different use case! — and start a conversation. If they’re intrigued, do a pilot. This will put your climate venture on their corporate partner’s radar and turn your untested tech into tested tech, a major selling point for larger companies.
Pro tip: to figure out which suppliers are working with your target corporate customer, scan industry press releases announcing new partnerships.
- Build relationships with nonprofits: Nonprofits and industry organizations offer a wealth of corporate connections and sector-specific expertise. A good starting point is to look for industry consortia (e.g. the Sustainable Aviation Buyers Alliance) in your sector and have preliminary conversations with their members to assess your product/market fit. Then, let your new allies play corporate matchmaker. If there is no consortium covering your sector, don’t worry. Large corporates often have other partnership models with non-profits across climate; most of these are announced publicly, and the non-profit partners are way more accessible than their corporate counterparts. Win them over and you have your foot in the door.
- Identify 🔑 programming: Big corporates build relationships with accelerators and incubators, which they use to filter for promising ventures. If you’re at the right stage and the accelerator application window is open, this could be a good path towards a strong relationship with the corporate sponsor.
- If the accelerator isn’t a fit for you, or you’re too late to apply, you can still connect with the program lead/manager for the accelerator, sell them on your vision, and work that relationship to get your corporate intro. Most accelerator managers love helping startups, even if the startup is outside the program they’re running.
Making your pitch
You’ve finessed your way into a meeting with the key decision maker at a big corporate — how do you tell your story and build a successful relationship? A few key tips:
- Know thyself: Define who you are and craft your strategy around that identity.
- If you’re an experienced climate entrepreneur with multiple exits to your name, big corporates will be more likely to sign an LOI early.
- If your team is inexperienced, the road will be longer. Come to the table with clear proof points and a well-defined growth strategy; even if you’re at the prototype stage, pointing upstream to quarterly production targets shows foresight.
- Be humble: There is a temptation to tell big corporates a big story — don’t. Odds are, your climate venture isn’t solely driving a sectoral transformation, so avoid promising the moon. Instead, make clear that an industry transition is underway and that your venture is uniquely positioned to solve a key challenge that corporate is facing in the transition. Show that you value getting to the next step without putting yourself on the hook to do the impossible.
- Know your customer (and the competition): Do your homework before you get in the door:
- If your potential corporate partner has published sustainability targets, read them; otherwise, risk appearing unprepared.
- Research who (the specific person) you’re speaking to. Look at their linked in profile and don’t assume just because they work for a corporate they don’t know anything about your sector.
- Additionally, make sure that you have a keen sense of your corporate partner’s competition. Some corporations actually want their competitors to simultaneously pilot a startup’s technology because it reduces their investment risk. So, in a sense, your corporate customer’s competitors may be your customers, too.
- Emphasize with your advocate: The sustainability lead pitching your product internally at a corporation is often not the person who will actually be using it day-to-day. As a result, your advocate may face resistance from their pro-status quo colleagues. Show empathy, recognize that they are expending personal capital on your behalf, and be patient.
Funding your pilot
Your dream big corporate is on board; now, how do you structure and fund your pilot?
- If you’ve raised equity, consider using that capital to fund a free pilot for your corporate partner, especially if your technology is unproven. This is savvy because risk-averse corporate actors will be hesitant to stop paying for their trusted, incumbent tech during a pilot, so your free trial will help them avoid paying for two competing products.
- If you don't have enough cash on your balance sheet, don't despair. Engage your new corporate partner and work out a cost structure that's advantageous for both sides. The key to this early negotiation is transparency. Also, engage your community for support. With a big corporate LOI in hand, you may be able to source external capital to fund your pilot (via grant, debt, convertible note, etc.).
- And remember, free today, shouldn’t mean free tomorrow. Make sure your pilot has terms for how pricing will work after you demonstrate performance. One possible model for establishing pricing: figure out what your corporate partner pays for its incumbent technology and price competitively. If your partner starts to see savings from day 1, their desire to switch will be all the greater.
Alexia Kelly has worked for more than 15 years at the intersection of public and private markets to accelerate the transition to the zero carbon economy. She currently serves as Director of Net Zero + Nature at Netflix, where she’s responsible for the company’s Science Based Target implementation and production decarbonization and clean technology strategy. She also leads Netflix’s global carbon credit and renewable energy purchasing strategies. In her nights and weekends, she serves as a Senior Advisor to the High Tide Foundation and Board Member of the Integrity Council for Voluntary Carbon Markets. Prior to joining Netflix, Alexia has founded two climate start ups and held senior roles at the U.S. Department of State’s Office of Global Change, World Resources Institute, ENGIE Impact, The Climate Trust and a family office. She also serves on several non profit boards. When she’s not working, she’s perfecting her kimchee recipe and loves hanging out with her husband and two kiddos in the beautiful Pacific Northwest, where they reside.