How does a startup ecosystem grow before a network of venture capital has developed? For many founders in Delaware and communities like it, the answer lies in partnerships with the local small business community.
Short on revenue and big on goals, early-stage founders need to build a local network and ask for favors. In many ways, it’s Strategic Partnerships 101.
“If you can find a local company where your vision and their vision align in a way that compliment each other, those people tend to be more focused on spending the right amount of money for the right idea more so than you’ll see angel investors,” said Kurbi founder Wes Garnett. “You’re getting double the bang for your time than you would spending six eight month trying to raise money from angels.”
“It was people like Julianne Cross, who was working as an independent freelancer in public relations and she took on our project, no questions asked,” said Garnett. “She was the single reason why anybody in the state knew who we were when we started because we had no outlets to the local media, we had no outlets to regional media and most importantly, we had no experience. It was a mutual benefit.”
Today, entrepreneurs can seek investment from around the world. Investors in other under-served communities have raised funding from venture capital firms in another market. It’s true, Wilmington has out-performed peer-sized cities in the number of deals. But for a young ecosystem with relatively inexperienced founders, that’s another hurdle.
So getting things done cheaply by leveraging a local network is vital.
Garnett said these partnerships can happen in two ways: there’s either capital looking for entrepreneurs, or there’s local companies that can’t afford to innovate on their own. There just needs to be mutual benefit — like the University of Delaware’s Horn Program in Entrepreneurship and now-Tempe, Ariz.-based crowdfunding startup USEED.
When Horn Program director Dan Freeman was launching the program, Garnett said he was looking for ways to connect UD to local entrepreneurs — and was sold on USEED.
“He put first dollar in and he had just started,” said Garnett. “It hadn’t even been six months yet and he was already taking on these big bets, because he had something to prove and we had something to prove.”
Strategic partnerships between startups and small businesses can be fruitful for the whole community. The business relationship between Wilmington-based startup Carvertise and print shop Precision Color Graphics (PCG). While Carvertise provides PCG with revenue and PCG provides Carvertise with consistent, discounted production, there’s more impact behind the partnership than surface-level dollar signs.
“It’s huge,” said PCG owner Simon Cranny. “Being in business, when you build good relationships with people can really make the difference.”
PCG houses Carvertise campaign cars and allows founders Mac Nagaswami and Greg Starr access to a conference room where customers can sign legal documents. As a small business owner himself, Cranny said he’s empathetic to Carvertise’s needs — and understands just how important it is to create valuable relationships within the business community.
“Shortly after we began, I learned how expensive quality video content can be to professionally produce,” said Terrell. “I approached John Meyer of Corporation Service Company because of his work promoting entrepreneurship within The Corporation Company/Incorporate.com division. John agreed to sponsor the project recognizing the value of content marketing in entrepreneurship education.”
Terrell said entrepreneurial ecosystems spawn in open and creative environments.
“When existing corporations open their doors to outside entrepreneurs, it creates a learning opportunity for all involved,” he said. “While working on this project together, CSC has developed relationships with local video content creators Evan Lober of Squatch Creative and Zach Phillips of The Kitchen. We are continuing to explore ideas on a documentary film highlighting the entrepreneur’s mindset & skill set.”
“I think the undercurrent here is that when local companies step up and are willing to be customers, they really do a huge service to the community in keeping good smart local startups home,” said Garnett.