Why sometimes Big businesses helps startups

rishi369

Hello All,

I have a question why sometimes big businesses helps small businesses/startups to setup their business.

I mean whats the profit for big businesses in doing this?

How they make their profit without being actual partner in that startup whose business they have setup

Tuah Bao

Hi @rishi369 ,

It is extremely rare that large corps giving out their money for FREE to small business owners to start up a business (without expecting any return).

It is usually the small business owners propose/present a business idea to the large corps to get startup funds. If the large corps think that the proposal would work (have great potential) then they will invest into the company by buying large amount of the shares.

The small business owners will implement the plan and report the progression to the investors at a regular basis. Investors will eventually sell their shares if the business successfully grow or continue to hold the shares for profit sharing. That is entirely up to the top management to decide what they want to do with the shares.

rishi369

https://community.startupnation.com/discussion/comment/70587#Comment_70587

And how it works when they don't do any actual investment (money) but sharing their some of resources to setup the business?

Serhii

It seems to me that any lending to a startup can be considered a purchase. 🙂

rishi369

https://community.startupnation.com/discussion/comment/70594#Comment_70594

So, should we take help from them or not?

Tuah Bao

Hi @rishi369 ,

It can be any kind of arrangement. If it doesn't involve money, then it can be other resources like technology, customer-based or whatsoever. Money is just one of resources.

The small business owner may have a brilliant business idea. The large corps can execute the idea to develop and sell some new product/service to their existing customers.

Small business owners may rely on the technology that the large corps could provide.

The arrangements are endless, they are custom. We do not have a fixed arrangement in the business world. All ideas that make money are good ideas.

rishi369

Thanks so much @tubefittings@Tuah Bao

impressionville

hi,

In my opinion, big business helps small startups to just introduce new ideas and solutions to bring new thinking in the organisation and to challenge the status quo

StephenCooksey

Thank you very much for sharing this helpful information with us! I'm a new company that's had amazing success with similar strategies!

rocking-m

Another reason a larger company may help a small business is that the SB provides a product or service the large company needs/wants.

Investing in the SB allows the larger company to get the products/services with less exposure, not having to add headcount, and potentially they can get exclusivity to prevent their competition from getting access to the product or service.

StephenCooksey

Thanks for this information!