“The greatest difficulty in the world is not for people to accept new ideas, but to make them forget about old ideas.”
I often think of this quote by John Maynard Keynes when portfolio companies approach me for guidance around doing deals with large corporate clients. The success and failure of most enterprise-focused startups rests on the team’s ability to secure their first big, institutional win and then leverage it into sales to other similar organizations.
Yet, complicated dealmaking psychology and deeply ingrained historical ways of doing things inside enterprises make it really tough for startups to break in and stay in. So, if you’re a founder who finds this particularly challenging, you’re not alone.
Understanding a large organization’s structure and corporate decision-making behaviors is difficult. I spent nearly two decades negotiating external and internal deals on Wall Street, before I became a full-time early-stage investor. I’m deeply familiar with the specific psychology of enterprise dealmaking in financial services, which is a notoriously difficult industry to sell to.
Interestingly, the principles I found effective in my past life to get deals over the line very much apply to startup founders pitching to large financial firms and other Goliaths. It comes down to knowing your audience, accepting the ever-shifting ground beneath your feet, and setting up terms that anticipate success.
Get clear on the role of the innovation team
If you’re a founder trying to win a large bank or an asset management firm as a client, your first job is simply to establish a foothold at the company. Some industry insiders turned entrepreneurs have a deep Rolodex of senior leaders in their target segment. If that is the case for you, by all means, leverage those contacts as far as they can take you. Otherwise, which team is your best point of entry? The short answer is, it depends.
Startups must maintain acute awareness of often short-term corporate psychology, embracing adaptability and nurturing internal champions.
As you might expect, my portfolio companies and I have found that the corporate innovation team is often a friendly way in, particularly for startups offering cross-functional tools, like middleware used and shared by multiple teams, or other solutions geared toward general employee productivity.
However, heavy fintech startups typically sell products that tackle business challenges of very specific divisions inside large financial services companies and, thus, may benefit from an alternate approach. For instance, if you’re selling risk management analytics for the front office, you would most likely start with traders and portfolio managers as beta users and turn them into vocal product champions versus routing your pitch through the innovation team.
Over time, though, it is valuable to cultivate relationships with multiple decision-makers and influencers across the firm — and the innovation or “fintech partnership” group can be a great source of internal introductions, including those at the executive level.