Why Deal Execution is Different with Platforms
Platform startups are different than SaaS tech startups. Since they have a winner-take-all dynamic, there are only one or two winners. Platform startups need scale almost more than they need cash.
Large enterprises have dry powder that is very valuable to startups. This dry powder is more than just cash on the balance sheet. It’s the latent demand, data, supply, value added services and other competitive advantages that a large corporation has at its disposal. But that value is locked inside the organization.
Applico’s deal teams will help your enterprise maximize its value when investing in or buying a platform startup by understanding how to capture and, ultimately, price your enterprise’s dry powder.
How to Identify Dry Powder
Your core business has a lot of assets – it’s our job to help you extend those competitive advantages into your new platform entity. Whether it’s your existing user base for demand or supply, data and existing inventory or value added services, Applico’s teams act as the perfect bridge between your internal resources and the new platform startup.
Your internal teams operate on different timelines than your new startup entity. We will make sure that your internal resources are executing to plan from both a business and technical roadmap.
The best kind of dry powder is demand. Even better is digital demand versus analog demand.
If your organization doesn’t have a lot of digital sales, all is not lost! Converting analog demand to digital demand is a key tenant to tapping into dry powder. These tactics and strategies are industry and platform specific. Here are some examples:
Pricing Dry Powder
After your dry powder is identified, a plan of mutual cooperation needs to be ironed out between the enterprise and the startup. The startup should be bringing value that helps the organization increase revenue and/or improve operational efficiencies. The enterprise should be bringing value that helps the startup scale faster.
Applico’s team is experienced in understanding how best to structure these relationships and how to optimize the pricing of the synergies.
To learn more about dry powder, please download our Platform Innovation Toolkit which has exercises and case studies.