Ignite Growth with Partnerships and Business Development

Each week this month we cover different types of growth motions. You can find last week’s newsletter here, where we chatted about Metrics That Matter for Product and Growth. This final week of the month highlights how your startup can use partnerships and business development to grow and prove what's possible.

For last month’s deep-dive on Network Effects, read here.

Business Development, or “BD”, is a fantastic way to grow your business. Simply put, BD primarily trades value via partnerships—as opposed to swapping products for money although many BD deals can be big, billion-dollar deals too. They're simply not traditional buyer-seller sales deals. Although many partnerships and relationships exist in paid media, because it's primarily a buyer and seller of advertising and promotional inventory, we’re not including it here. There are also other types of partnerships we're not covering here which we can discuss later. The focus for this week is on some of the most frequently used partnership models for igniting growth.

5 types of business development partnerships to ignite growth:

1. When two companies embark on a Distribution Deal, one provides a product or service, and the other shares access and in essence (or additional) promotion to their customers in return. We saw this in the early days of Google when it became the default search engine in part by partnering with different web browsers and device manufacturers. Distribution is one of my passions and superpowers as an operator and has been key to the success of every startup and global corporation I've served. Some believe distribution is a critical path to most startups’ trajectory to product market fit, growth, and success. Content, media, music, sport, and entertainment-driven businesses rely heavily upon distribution for growth and profit.

2. In a Co-production Partnership, two different businesses will use their complementary attributes to collaborate on and co-create a product. We do this with entrepreneurs and large corporations at co-created every day and create entirely new ventures from these new problem-solving products. We saw this in action when Apple and Nike created the Apple Watch where Nike had its own look and athlete-specific features. We also saw the demise of one of these partnerships recently between Kanye West and Adidas. In this example, if public comments by both are accurate, Kanye designed the shoes and licensed his brand to Adidas. Adidas manufactured and sold the shoes and acquired the rights to the designs and shoes and can produce them without Kayne. However, many Kanye loyalists are unlikely to buy a shoe designed by him if he's not getting royalties from the purchase. For customers who just like the shoes, it may not matter. In any partnership, you've got to prepare for the worst-case scenario. Sometimes co-productions can also be structured as joint ventures.

3. In a Joint Venture or “JV”, two companies create a new product together typically through a new legal entity that is owned in part by both companies. This is usually a long-term collaboration that is characterized by investment and equity exchanges. A great example is when I was at Viacom, we created JVs in non-core geographical markets where we brought our powerful brands and sometimes a certain level of marketing support and/or programming, but a local incumbent broadcaster or other company would be the operators of the newly formed businesses. It allowed us to enter markets more quickly and affordably. JVs are oftentimes hard to manage successfully in my experience unless ultimate decision-making is very clearly outlined and agreed to upfront and even then it's hard to anticipate all scenarios and changing market dynamics.

4. Licensing is another great way to ignite growth. Here, a nascent company or a company looking to reposition products or a business uses a company’s more popular brand to help sell its products. At a time when Lego, one of our prehype partners, wasn’t experiencing the sales numbers they wanted, the company decided to license characters and IP from well-known movies, TV series, and cartoons. The extra brand recognition and affinity helped Lego and sales soon climbed. When I first saw the Adidas x Gucci collaboration, I was excited by the new line and I just saw North Face getting into the game. This helps all the companies up-level athleisure into the premium-priced luxury segment. A brand license is a key to their combined success. I haven't looked into this partnership, so it may very well be a licensing-based JV. As a senior exec at Viacom, I was responsible for year-on-year growth through licensing and distribution amongst other things, so you can blame my team for seeing SpongeBob on every possible product you can imagine through licensing deals. At Napster, I had profits coming in from underwear companies at one point which raises one of the risks of licensing being that of brand erosion when you get licensing wrong. Virgin was one of the early innovators to generate profit from licensing its brand to a variety of products and businesses across many industry sectors and geographies where it has no or little operating experience.

5. Last but not least, Supply Partners are used to lock in inputs that are necessary for specific products. Sometimes these are basic vendor relationships and therefore more supply and demand based seller customer relationships, but these are often key especially during different stages of a company's growth when the team may want to focus on their MVP or core operating business before looking at possible efficiencies of producing the product themselves or acquiring a company to fulfill this need. Moreover, oftentimes the buyer here is not simply transacting, but specifying what and sometimes how something needs to be produced which can mean the supplier needs to make some kind of investment in order to fulfill the partnership. For example, in the early days of BARK (another prehype venture) suppliers provided products for the subscription service until BARK started making its own products as well as other channel partners and suppliers, to create growth.

Questions to ask yourself when choosing between different types of partnerships:

• What goal(s) are you working toward through this new partnership and what are the advantages and risks versus going alone?
• Who are your dream partners and what do you know about what it's like to partner with them? What’s the best strategy to find out and engage them?
• Is it possible that the friends, mentors, advisors, investors, and business partners in your existing network can help connect you with new partners? Warm introductions are always best, but a compelling cold outreach to the right person at the right time can also yield positive outcomes.
• What attributes do you have that larger, or other companies might find useful? What are they looking for that you can offer?
• Finally, how easy or hard are they and your company to work with? I recall doing what I was told was Apple's first social media partnership when I was at bebo and they were notoriously hard to work with at that time. The Music and events partnership was successful for both companies, but it was hard to get over the line to signature and it was especially hard to influence their behavior through the lifespan of the relationship. If you're hard to work with, partnerships will be difficult and the reverse is true. Partnerships between startups and large global companies can be challenging especially when it comes to pacing, expectations on both sides of what success looks like, differing company cultures and skill sets (which is also often part of the value exchange), and the cost and complexity of legal and other documentation and regulation. The BD, sales and partnership teams at AWS are amazing at matching up startups with the right resources and teams at AWS Startups who have aligned goals, pace, and skills to ensure affordable innovation at scale with astonishing velocity. They are partner and customer obsessed!

Once you decide which type of partnership will be most beneficial to your business, you can start implementing and watch your user base and/or sales take off!

Looking to learn more? Check out the STARTUP RESOURCES section below.

If you’re looking for more support, AWS can help your startup #ProveWhatsPossible. Learn more here. If you're looking for BD mentorship and a supportive community, check out Angel Club.

📅 UPCOMING EVENTS

November 29 at 2 pm CET | AWS Discovery Day - Introduction to securing your AWS Cloud

Whether you are thinking of migrating to the AWS Cloud or already have a workload running on AWS, securing your data and resources should be at the top of the list. This event introduces several AWS services that you can use to improve your current security posture. It also covers the different security design principles that will help you to plan your security approach in the AWS Cloud and provides information on resources you can use to further your knowledge around security on AWS. Delivered in French.

November 29 at 11:30 am Central | Why Get AWS Certified, Presented by AWS Skills Center Seattle

In this webinar, you’ll learn about the advantages of getting AWS Certified. You’ll also learn about the various certifications offered by AWS and what is available to help you pass these certifications. Delivered in English.

November 29 at 1 pm GMT | AWS Immersion Day - Take InsightCloudSec for a Test Drive

Our free 4-hour AWS Immersion Days give you the chance to get hands-on with InsightCloudSec in a stand-alone sandbox AWS account.

December 1 | Black Founders Demo Day - Tech Basel, Miami, FL

At the intersection of culture and capital, you’ll find Black Founders Demo Day! Twelve Black & Brown founder-led companies from all over the country will showcase their business by displaying their products or services to potential customers, as well as pitching onstage to a panel of active venture capital investors. Attendees can also get in on the action by investing through Wefunder’s equity crowdfunding in real-time.

December 9 at 9:00 am Pacific | Angel Club AMA with Angel Gambino + Cat Hernandez

Cat Hernandez Middleton is a former operator and current people-first investor who is passionate about supporting a diverse set of early-stage founders as they build mission-driven companies that are changing the world for the better. She is a Partner and founding team member of The Venture Collective and in her spare time works closely with the People Tech Partners, W Fund, and ADP Ventures. RSVP and extend the invitation to join this conversation with Angel and Cat!

Click here for more events.

💸 🔦 INVESTOR SPOTLIGHT

Vivek Ramaswami is Partner at Madrona that invests in seed through growth companies in the Pacific Northwest and across North America. Vivek personally focuses on Series A, B, and C-stage companies in software, developer tools, cloud infrastructure, and intelligent applications in AI/ML.

When I asked Vivek what growth tactics have proven effective for his portfolio or specific startups within his portfolio, he had this to share:

"It all starts with having a great product but we’ve found that building and growing a community is particularly helpful for open-source companies and those building through product-led growth motions. We’ve had several companies in our portfolio who grew by starting with a small, passionate community of developers, engaging them through Slack groups and IRL meetups, that eventually grew into a large enough community that created terrific viral buzz and branding around the product or company.”

What should startups at each stage avoid when trying to grow fast?

Vivek believes it’s key to “avoid scaling up the GTM team or marketing spend aggressively before true product market fit is determined. This can be the kiss of death for many startups, particularly in an environment where funding may be harder to obtain than in the past two years. We’ve seen many startups burn through millions of marketing spend dollars with very little ROI because they hadn’t first cleared the “PMF bar” first."

Founders can connect with Vivek on Twitter and LinkedIn, or email him at vivek@madrona.com.

😇 MEET AN ANGEL CLUB MENTOR

Angel Club is an inclusive membership community for underrepresented angel-stage founders and angel investors. Angel Club provides access to seasoned mentors, monthly events, a robust resource library, investor and media databases, and more. Join Angel Club or email hello@angelclub.com for more info.

Mike Jbara is the CEO of music tech startup MQA Ltd. and serves on its board of directors. Before joining MQA in 2016, Mike held several executive roles within the Warner Music Group including President of WEA Corp and ADA, Head of Studios and Digital Operations, and EVP, Technology. Before joining Warner, Jbara was a leader in the New York-based Media and Entertainment Practice at Andersen Consulting (now Accenture).

Angel Club Members can register for a 1:1 mentor session with Mike as part of their membership.

❓ASK AN EXPERT

The AWS Startup Loft exists to support your startup journey. Start and grow with a wealth of resources, exclusive webinars, and free 1:1 sessions with an AWS startup expert.

🧰 STARTUP RESOURCES

• Apply for up to $100k in free AWS credits & utilize startup resources and training with AWS Activate
• AWS Startup Programs
• Pipeline Cures All article by Andreessen Horowitz
• If you want to learn about flywheels, you can read this Rosieland blog post, Community Culture Flywheels, or this article by Andy Johnson.

🍾 CELEBRATIONS

NEW DEAL FLOW: Check out who’s investing in your sector!

A $78 million Series A round was led by San Francisco startup Rezo Therapeutics, a company that provides information for drug discovery by mapping molecular disease networks. The round was co-led by SR One, a16z Bio + Health, and Norwest Venture Partners, with help from others including SV Angel, Liquid 2 Ventures, and Hawktail. More here.

Paris startup Fairmat, which is focused on transforming unused carbon fiber composite pieces into new material, raised a $34.8 million Series A round. Temasek and CNP co-led the deal, with Pictet Group, Singular, and The Friedkin Group International also pitching in. This brings the total capital the company has raised to $44.9 million. More here.

Stamford, Ct.-based startup SponsorUnited, which is creating a database of sponsorship deals, raised a $35 million Series A round. Spectrum Equity led the deal at a post-money valuation of over $100 million, bringing the total the company has raised to $38.6 million. More here.

New York-based software platform Taktile, which allows fintech companies to create and test automated decision flows more quickly, has raised a $20 million Series A round. The deal, which was co-led by Index Ventures and Tiger Global, brings the total capital the startup has raised to $24.7 million. More here.

New York-based healthcare data AI startup Capitol, which is helmed by former Airbnb design lead Shaun Modi, has raised $10 million in seed funding. The deal was led by 468 Capital, with help from Brian Chesky, Chase Coleman, Designer Fund, Fuel Capital, Nomad Capital, AirAngels, Sanno Capital, John McCormick, and others. More here.

The Oxford, UK-based startup Diffblue, which automatically generates code to test software platforms with the help of AI, raised an $8 million Series A round. Albion VC led the deal, with participation from IP Group, Parkwalk, Hostplus, Oxford Technology, and Innovations EIS Fund. More here.

London startup Surfboard, whose collaborative planning software aims to help managers prevent burnout in team members, raised a $5 million seed round. The round was led by Speedinvest, with Fly Ventures, Seed Camp, Nomad Capital, Foreword VC, and Tokyo Black chipping in. More here.

A $2.5 million seed round was raised by Cambridge, Ma.-based startup Surround Insurance. The company offers lifestyle-based insurance for driving, renting, and freelancing. MassMutual led the deal via its MM Catalyst Fund, with participation from Aperture VC, Newark Venture Partners and Cameron Ventures. More here.

Digital frame and photo startup Aura has raised a $26 million round. The funding, a mix of debt and equity, was led by Lago Innovation Fund, bringing the total the company has raised to $40.9 million. More here.

The Orlando, Fl.-based startup Care.ai, which monitors clinical and operational workflows in order to optimize patient outcomes with the help of AI, raised a $27 million round. The deal was led by Crescent Cove Advisors. More here.

London startup Turbine, which runs simulations of potential therapies using AI, raised a $20.6 million Series A round. The deal was co-led by Mercia and MSD Global Health Innovation Fund, with participation from Day One Capital and previous investors Accel, Delin Ventures, and XTX Ventures. This brings the total the company has raised to $30.9 million. More here.

A €27 million ($28 million) Series A round has been raised by the apartment rental platform Ukio, which is based in Barcelona. The round was led by Felix Capital, with participation from Kreos Capital, Breega, Partech, Heartcore, Bynd and various angel investors. More here.

Austin startup AMFG, which creates workflow automation software for 3D printing, raised an $8.5 million round. The deal was led by Intel Capital. More here.

Los Angeles-based web3 startup Carv has raised a $4 million round, valued at $40 million. The deal was led by Vertex, which is part of Temasek. More here.

San Francisco startup Clerk, which makes authentication and user management software, raised a $6.2 million seed round. Andreessen Horowitz led the deal, with S28 Capital, Fathom Capital, and South Park Commons chipping in. More here.

A $3.5 million seed round was raised by New York startup Efficient Capital Labs, which connects India-based B2B SaaS startups with U.S. lenders. 645 Ventures led the deal, with Singh Cap, The Fund, and Operator Partners chipping in. More here.

Kenyan startup Leta, which gives supply chain logistics information to delivery businesses, raised a $3 million pre-seed round. The deal was led by The 4Di Capital, Chandaria Capital, Chui Ventures, PANI, Samurai Incubate, and Verdant Frontiers Fintech. More here.

A $3.5 million pre-seed round was raised by the startup Popup, which is creating a no-code platform for the creation, management, and hosting of online stores. Accel led the deal, with participation from Seedcamp and 20VC. More here.

RedBrick AI, the health-tech platform harnessing artificial intelligence, has raised a $4.6 million seed round. Sequoia India and Southeast Asia’s Surge led the deal. More here.

The ****Lehi, UT-based SaaS healthcare marketing platform SocialClimb raised an $8.5 million round. The deal was co-led by Spring Capital Partners and Resolve Growth, bringing the total the company has raised to $22.5 million. More here.

New York startup Wesper, a clinical-grade, FDA-cleared, wireless home sleep lab company, raised a $7.5 million Series A round. Ceros Capital Markets led the deal, bringing the total capital the company has raised to $11.8 million. More here.

Celebal Technologies, a seven-year-old Indian startup that operates a software consulting business, raised a $32 million round from Norwest Venture Partners. More here.

The Palo Alto-based social media platform Fizz has raised a $12 million Series A round. NEA led the deal, with Lightspeed Venture Partners, Rocketship VC, Owl Ventures, Smash Ventures and New Horizon participating. More here.

A $32 million Series A debt-equity round was raised by the startup Ramani, which is based in Dar Es Salaam, Tanzania, and focuses on consumer-packaged goods (CPG) supply chains. The deal was led by Flexcap Ventures. More here.

San Francisco bank engagement startup Flourish Fi has raised a $2.3 million seed round, bringing their total capital raised to $4.3 million. Magma Partners led the deal, with Remarkable Ventures, Lightspeed Venture Partners Scout Fund, Canary, Seedstars, Kadmotek VC, I Am the Fund, Potencia Ventures, Amplifica Capital, and Cap Table Coalition pitching in. More here.

Kansas City startup Saile, which creates sales bots using AI, raised a $1.35 million seed round. Valor Ventures led the deal, with participation from KCRise Fund. More here.

Palo Alto startup Segmed, which provides real-world medical imaging datasets for clinicians, researchers, and developers, raised a $5.2 million seed round. Nina Capital led the deal, with participation from iGan Partners, M3 Inc, Mighty Capital, Expeditions Fund, and Alchemist Accelerator. More here.

👏🏻 NEW FUNDS: Applauding the latest funds investing in startups!

New York-based venture capital firm HC9 Ventures has closed an $83 million fund, which was led by healthcare industry veterans Richard Lungen, Jon Gordon and Charlie Falcone. The fund will be focused on healthcare software and services startups at seed and Series A stages. More here.

The early-stage venture firm Early Light Ventures, which is based in Baltimore and funds B2B startups, has raised at least $10.6 million of what it hopes will be a $15 million second fund. More here.

💸 MONEY MOVES

Bob Iger has returned to his position as Disney’s CEO. His $27 million salary breaks down to $1 million annually with a $1 million bonus and $25 million in Disney stock and stock options. More here.

Airbnb co-founder Joe Gebbiac and the former CEO of Flex, Mike McNamara, have co-founded Samara. Their new company will build small homes in people’s backyards. More here.

Remember to reach out to advisors that can help you build your team, business, or fund. Learn all about how to source and leverage advisors and customize these templates to start reaching out today!

AFTER HOURS:

🤤 Anticipating - Louis Vuitton’s first luxury hotel is set to open inside its Paris headquarters. I cannot wait to indulge here.

😳 Watching - The White Lotus. I just love this show. Want to visit some of the Sicilian hot spots from Season 2? This Bazaar article gives you the inside scoop.

🎵 Listening - I found this fun post listing the Most Popular Wedding Song from the Year You Were Born — what a fun playlist! The song from my birth year? “Colour My World” by Chicago. What’s yours? I’d love to hear!

INVESTORS: Do you want access to Angel Club deal flow? Investors are invited to complete this form so that we can match targeted opportunities to your investment thesis.

FOUNDERS: Do you want to pitch to investors in Angel Club? Fill out this form so that we can learn more about your business, share relevant opportunities, and make introductions.

📢 Have something you want to share in an upcoming edition? Message me here or email info@angelgambino.com.

Make it a great week!

With grit, grace, and gratitude,

Angel