3 factors for successful partnerships between start-ups and large enterprises

Establishing a partnership between a start-up and a large enterprise can resemble trying to integrate a figure skater into an ice hockey team: they are both at ease on the ice, but they do not have the same objectives or the same culture, which makes it a complicated operation. In sport, these two disciplines share the same playing field – the ice rink – but do not interact. By contrast, in industry there are numerous companies looking to collaborate with start-ups for innovation purposes. So what conditions are required for such a partnership to succeed?

Start-up competitions are multiplying; incubators and innovation lab are being created within large enterprises to welcome start-ups. The aim of these initiatives is to intensify contact between the employees of big groups and entrepreneurs, as well as to create a favourable environment for the realisation of partnerships.

However, in the event of failure, the consequences for the two parties are not the same. The large enterprise will have lost time and money. It will adapt its strategy, exploring internal developments or simply stopping the project. For the start-up, the effort and resources employed will have a considerable effect on its limited funds. If no cash is ultimately generated, such a commitment may bring about its collapse. It is thus judicious to assess the potential for collaboration upfront.

Last November, in collaboration with two innovation experts, Blaise Vonlanthen and Metin Zerman, we began a process to identify success factors. Our objective was to create a simple tool that would enable parties to determine whether it is appropriate to establish a partnership. We first organised a workshop bringing together 20 entrepreneurs as part of Carrefour des Créateurs, an annual event hosted by the Genilem Association.

This workshop enabled us to identify the following three key success factors:

  • Strategic fit
  • Capacity for action
  • Balance of power

The partnership between NetGuardians and Swisscom enables us to highlight these three factors. Established by Bernard Hofmann, who is responsible for banking platforms at Swisscom, it is a notable example of a successful partnership between a start-up and a large enterprise.

Fighting against fraudulent banking transactions

NetGuardians specialises in detecting fraudulent transactions in the financial sector. Its solution permits abnormal activities to be identified in real time, and thus to block suspect transactions.

All banking services are becoming accessible online, whether from a PC, tablet or mobile. It is possible to transfer money at any time – from your home, in your office or on a bus. Such developments are giving fraudsters opportunities to access your account and divert your money using increasingly sophisticated techniques.

Cybercriminals 2.0 no longer attempt to intercept your code and copy your bank card at the cash dispenser. These new fraudsters may, for example, pose as a Microsoft employee and contact you to ask that you update your Windows licence, which they pretend has expired. They ask you to make a bank transfer to buy a new activation key. When you make this transaction, your e-banking accesses are intercepted.

The impact of such new methods of fraud is substantial: the amounts that are diverted are much higher than those stolen via a bank card, and such fraud mechanisms can be employed on a larger scale. Targeted attacks of this kind can thus rapidly lead to the theft of several hundreds of thousands of Swiss francs in a few minutes.

The algorithms developed by NetGuardians enable actions including the detection and blocking of abnormal transactions, for instance the transfer of CHF 40 (cost of a licence) followed several seconds later by a second transaction for an amount of CHF 10,000.

An complementary relationship

The strategic fit is optimal: Swisscom manages the infrastructure of several banking institutions. Fraud detection is a solution that responds to a customer need and is not currently in the portfolio of solutions offered. The NetGuardians products thus complement the offering perfectly. The opportunity, product and target market are clearly defined.

The capacity for action covers both the level of risk that the large enterprise is prepared to take and the flexibility available to integrate the solution into its processes. With NetGuardians, risk-taking is limited, as the start-up has a mature solution used by several customers. Moreover, the relationship was established through a satisfied customer who recommended it.

In process terms, the software solution offered can be hosted in Swisscom’s infrastructure without compromising the speed of the solution’s development. Moreover, the start-up can develop its business model by offering its product in the form of a service. The banking establishment pays a monthly amount according to the number and type of checks carried out.

The balance of power is very even: Swisscom is not the exclusive distribution channel for NetGuardians products. The target market is well defined and common activities are concentrated in Switzerland. The start-up addresses a global market and will be able to replicate this partnership model with other operators.  

A tool for analysing success factors

If the strategic objectives are clear but it is difficult to integrate the solution into internal processes, the partnership will have trouble functioning and execution will be complicated. It is thus necessary to have an environment in which the three factors identified are favourable. It is a question of successfully playing the first chord:

The three success factors identified are not exclusive by any means. We are going to continue to explore and develop our analytical tool through workshops and based on our experience.

In conclusion, the collaboration with NetGuardians has enabled Swisscom to offer a fraud detection solution in less than one year instead of developing an internal solution, which would have taken between three and five years. This partnership also enables the start-up to speed up its growth.

Joint reflection on success factors will enable partnerships of this kind to be multiplied and agility to be increased. This will benefit the ecosystem as a whole: in the canton of Vaud, there are more than 32 start-ups that, like NetGuardians, exploit big data technologies and artificial intelligence, as this chart shows.

Below, you’ll find my presentation on this subject at the Tech Meeting at the chambre du commerce et d’industrie in Fribourg end of November: