The Comprehensive Guide to Building a Startup Partner Program
The Comprehensive Guide to Building a Startup Partner Program
Partnerships as a go to market strategy is growing in popularity, with many recognizing it as an efficient way of generating revenue for businesses.
However, when talking about a partnership program, there are several different partner types, and programs that you can run to achieve your desired results.
One effective program is a startup partnership program.
This involves offering a discounted version of your software to selected early-stage companies to help them grow while gaining new customers. The hope is some of these startups become large, profitable companies investing more in your software.
However, creating a successful startup partnership program requires careful planning and implementation.
In this blog post, we'll share how to build and grow a successful startup partner program.
Whether you're thinking about starting a partnership program or trying to expand an existing one, this post is for you.
Let's dive in and learn about the opportunities offered by a startup partner program.
What is a startup partner program
Before we get into the ins and outs of the building of a program, its worth starting off by stating definitively what we are talking about when we reference a startup partner program.
Although we touched on it briefly, a “Startup Partner Program” is a strategic initiative often launched by established companies aiming to win business from early-stage startups.
The goal is to provide these startups with tools, resources, or services (like software) often at a discounted rate or sometimes for free, to aid their growth and success.
For instance, a software company might offer a significantly discounted or free version of its product to qualifying startups.
The aim is to support these startups during their early growth phase when resources might be scarce. In return, the startups could become loyal customers and significantly contribute to the company's revenue as they grow and scale.
Startup program attracts seed and early-stage startups by providing significantly discounted access to top technology and service providers while minimizing impact on runway. In return, these startups adopt these technologies early and continue to grow into the ecosystem. Users acquired through startup programs are shown to generate higher LTV and have a decreased risk of churn.
An example of this is the Zendesk for Startups Program. Zendesk, a service-first CRM company, offers qualifying startups six months of free access
By providing a substantial discount on their enterprise-grade software, they attract numerous early-stage companies, edging out competitors by becoming the go-to solution.
The software becomes deeply integrated into these companies' operations, and after the initial six-month free period, it becomes so essential to their business that they continue the subscription at the regular rate.
Step 1: Deciding if a startup partner program is for you
Having established the 'why', the question remains: should every company launch a startup partner program?
The answer isn't universally affirmative, with certain prerequisites making such programs viable.
The primary consideration is the relevance of the software you offer.
It should be critical to an early-stage software company's operations, compelling them to adopt it.
Josh Jones, Head of Corporate and Business Development at Vanta comments on this saying “Our startup partner program has made Vanta available to hundreds of startups so they can achieve compliance, build trust with their customers, and grow their businesses”, the reason it has been so successful for Vanta is due to the relevance of their software to early stage companies.
For instance, startups may not be overly interested in highly technical or enterprise-oriented software.
These can be challenging to implement and adopt, potentially causing confusion and detracting from their core concerns at an early stage.
Conversely, software types that are mission-critical and well-suited for a partner program include customer support software, CRM software, and infrastructure platforms like AWS and Azure.
These are fundamental to an early-stage company's operation and thus are likely to be a good fit for a startup program.
Francois Grenier, Head of Partnerships at Thoropass a platform that gets companies SOC 2 ready echoes this sentiment when discussing the startup program that they have created for early stage companies saying “startups are a big part of our customer base, as we become the compliance team they didn't have” the suitability of their platform for early stage companies make a startup program a no brainer.
After determining that your software is a suitable candidate for a startup partner program, the next step is to secure the support of your executive team.
The proposal of selling your product at a steep discount might initially unsettle the executives. Therefore, you need to arm yourself with a well-prepared business case.
This should include logical arguments and strategic reasoning, the ultimate goal being to attract high-potential startups and transform them into fully paying customers in the long run.
Ben Wright, founder of Partner Fuel a partnership consultancy says on the topic “A startup program may initially seem crazy to executives who see the upfront discount without understanding the strategic vision, it's up to your as a partnership professional to help them see it”
Step 2: Selecting an offer for startups
Once you have determined that your software is a good fit for a startup partner program, your next step is to determine the offer you are going to create in order to get companies into your program.
There are a few things to consider here…
Competitor Research
The first step in determining what offer to create for eligible startups is to do some surface level research into whether your competitors have a startup offer, and what they are offering.
If you think about the profile of the company you are going after, startups, they are most likely to go with the most affordable solution.
Even in a scenario where your software is better, the additional months will count for a lot.
What this means is that if, through your research you determine that your competitors are offering 9 months free of their solution, and you were only considering 6, this could create an issue for your startup program, as early stage companies are likely to view the additional three months offered by your competitor as extremely attractive.
One simple way to discover competitive startup offers is to simply Google “[Competitor Name] startup discount”. You can also check public marketplaces such as the Builtfirst Marketplace.
It’s important to note, however, that in many cases negotiate exclusive offers that are exclusive, which can make competitive research difficult.
Cost of management
When planning your startup partner program, it's not only the discount offered to these companies at sign-up that matters. You should also factor in the cost of customer management post-sign-up.
If you're planning on assigning a dedicated customer success manager, for instance, the cost of onboarding a startup goes beyond the initial sign-up stage to include the ongoing management of the account.
Thus, when determining the pricing for customers, it's vital to take into account the overall management cost. This should be incorporated into your overall pricing strategy.
Kelsey Aina, Principal Head of StartUp Growth at HubSpot adds an additional tip on how to select a discount she says “Make sure what you are offering startups is exclusive, if it its something everyone can get it and not exclusive it will languish on a shelf and nobody will use it”
Step 3: Determine qualification criteria for startups
We initiated this blog post by elucidating why software companies establish startup programs. Essentially, they're investing in early-stage companies, hoping that these ventures will become successful unicorns and remain loyal, paying customers for years.
Therefore, you must establish certain eligibility criteria to increase the probability of this outcome.
To illustrate this point, consider the eligibility requirements set by some popular startup programs.
Help Scout, a well-known customer support software provider, requires applicants to provide their incorporation status, revenue, and other details to determine their eligibility for their startup program.
Similarly, HubSpot's startup offer considers funding amount when deciding on eligibility.
When crafting eligibility criteria for your startup program, you should consider setting certain prerequisites that help you determine whether the applying startup has a good chance of achieving the level of success you anticipate, and thus being able to afford your software.
Here are some typical considerations you might want to include:
- Funding amount: Funded startups often have a higher potential to become larger companies.
- Incorporation status: Incorporated companies generally indicate a more serious commitment than unincorporated ones.
- Revenue: This can be a helpful indicator of the startup's current success.
- Number of employees: Another indicator of a startup’s current success and future ACV.
- Years in operation: Since you're targeting early-stage companies with your offer, you might consider excluding those that are more than 2 years old.
Step 4: Generating Demand
Once you have your program set up internally, the next thing you want to do is to generate demand from early stage companies.
There is no point in creating a startup partner program without actually having startups register interest.
There are a few ways to make startups aware of your program.
VC Relationships
The initial approach to reach startups effectively involves strategic partnerships with venture capitalists (VCs) who possess a diverse portfolio of companies. To begin, focus on engaging VCs that have already invested in your startup, as they are already aligned with your product's success.
Start by communicating your startup program to these VCs, as it serves as an easy entry point, given their investment in your product and interest in your company's achievements.
Once you've tapped into the VCs who are backing your company, create a list of other VCs to target.
Websites like Crunchbase can be valuable resources to identify potential partners by searching for "VCs in (target city)."
To connect with the most suitable individuals within these VCs, typically aim for roles like "Head of Portfolio or Platform."
Utilize LinkedIn to locate the relevant contacts, and approach them with thoughtful cold outreach, enticing them to engage in a conversation about your software product and its benefits for their portfolio companies.
During your pitch, emphasize the overall business advantages your software brings, rather than merely focusing on discounted rates. Showcase how your solution can enhance customer experiences and foster customer retention, rather than leading with price-based incentives.
Francois Grenier of Thoropass explains this in more depth explaining “Our startup program, working closely with VCs and accelerators, is an essential part of our partnerships and marketing strategy. It works because the value we bring to their portfolio companies helps them grow, which obviously makes sense for investors”
By demonstrating the substantial business benefits of your software, you are more likely to garner interest and secure referrals from VCs to their portfolio companies. This approach positions your product as a valuable asset, driving increased adoption and success among startups.
If you seek a simpler approach to connect with numerous VCs, explore the advantages of Builtfirst.
Builtfirst offers VCs and accelerators a white-labeled marketplace packed with exclusive perks for their startups.
This makes it a go-to platform for many VCs and accelerators, with an extensive user base.
As a software company, you can showcase your startup perk on the platform. VCs and accelerators can effortlessly choose and incorporate your solution into their marketplaces, granting you heightened visibility and increased exposure to a wide array of potential partners.
Partner with other companies.
As expected, you're not alone in pursuing a startup partner program. Many other companies share the same goal: to reach as many startups as possible.
Instead of viewing these companies as competitors, consider partnering with them. You can establish arrangements where you offer their discounted offers to any companies that apply through your startup program, and they do the same in return.
An effortless way to implement this collaboration is by integrating other startups into your sign-up process.
When a company joins your startup program and receives their initial sign-up information, you can include offers from other startups to entice them to explore these opportunities as well.
By working together, you can collectively amplify your reach and foster a thriving ecosystem of mutual support.
Ben Wright adds to this idea saying “Everyone who has a startup program wants the same thing, more startup customers, partner together and everybody wins”.
Again, marketplace solutions like Builtfirst makes it easy to locate companies that are like you in offering discounted deals.
You are able to easily see the range of companies who are offering solutions, and from that create a list of companies that you would like to partner with.
Affiliate Websites
Startup offers are not limited to marketplace software companies. There are websites that curate and showcase startup perks, often requiring a membership fee or implementing an affiliate commission structure with software companies to facilitate broader tool promotion.
Examples of such websites include F6S.
You can easily find these platforms through a straightforward Google search, and listing your offer is generally straightforward, provided you are willing to pay them a commission for each company that signs up through their website.
However, it is crucial to consider the commission payment as part of your overall customer acquisition costs.
While this option can be effective for many companies, particularly those offering substantial upfront discounts, it may not be feasible for others, depending on their pricing strategy.
Sponsorships
For larger companies with the willingness to invest more in promoting their startup program to a broader audience of early-stage startups, sponsorship opportunities can be highly beneficial.
When exploring sponsorships as a means to promote your startup program, consider sponsoring events, conferences, and webinars specifically tailored to early-stage startups.
Events like Startup Grind are excellent examples of conferences worth sponsoring.
Startup Grind hosts monthly events globally, along with more comprehensive conferences several times a year.
These conferences attract thousands of startups, and so offer a great opportunity to get your startup offer in front of a significant number of startups all at once.
These conferences also offer a variety of different sponsorship opportunities meaning regardless of the size of your company there is most likely a sponsorship option that will fit your company.
While sponsorship costs may be significant, these events provide a unique opportunity to reach a large number of startups in a single setting.
Step 5: Tracking Success
The eventual hope for your startup partner program is that it creates an ongoing pipeline of high potential companies that will eventually convert into high paying customers.
However, outside of this metric there are also some additional metrics that you will want to track in order to work out whether your startup partner program is successful.
Trial to paid
One of the most critical metrics you'll want to monitor closely is the number of customers who transition from the free or discounted offer in your startup partner program to becoming paying customers.
This metric holds immense importance as it provides insights into customer retention and the effectiveness of your program.
If you observe a high drop-off rate, where customers merely take advantage of the discount but don't convert to paying customers, it might be time to reevaluate your offer.
Consider adjusting your offer to be less upfront or exploring alternative pricing strategies.
Additionally, it could indicate that your paid version is too costly for early-stage companies, raising the need to reconsider the long-term viability of your startup partner program as a growth strategy.
Conversely, if you notice a significantly high conversion rate of startup offer customers transitioning to paid plans, it signals a successful program.
In such cases, you might consider allocating additional resources to promote and expand awareness of your startup offer among more startups.
Capitalizing on this positive trend can fuel further growth and solidify your program's impact.
LTV
In addition to monitoring paid conversion rates, a crucial long-term metric to track is the Lifetime Value (LTV) of each startup customer.
In an ideal scenario, your startup partner program will attract high-value companies that eventually become significant spenders, contributing hundreds of thousands of dollars to your company's revenue.
Keeping a close eye on this metric is essential as it justifies increased investment, such as sponsorships (as discussed earlier) or leveraging software solutions like Builtfirst to reach even more companies.
The discounted or free version of your software offered to startups becomes highly worthwhile if a few early-stage companies, benefiting from the offer, grow into substantial unicorn-style companies. Their long-term engagement and significant spending contribute significantly to the overall success and sustainability of your startup partner program
Pipeline
While "Pipeline" serves as the overarching headline of this section, it's essential to segment your overall pipeline related to your startup partner program into distinct buckets to derive useful insights.
Rather than solely focusing on the total number of companies signing up for your startup program, it becomes more valuable to analyze the sources of these leads.
For instance, you may find a significant influx of startups discovering your perks through platforms like Builtfirst.
On the other hand, you might be receiving numerous leads from specific VC relationships.
These data points offer immense value and enable you to pinpoint the sources and partners where you may consider doubling down on efforts.
By understanding which channels or relationships are driving the most leads, you can strategically allocate resources to further nurture and capitalize on these fruitful partnerships.
Fortunately, when you list your software offer on a platform like Builtfirst, these metrics are readily available through a user-friendly dashboard.
This streamlined tracking process enables you to easily determine the sources of leads, simplifying the overall analysis of lead generation.
Step 7: Common Mistakes to avoid
This guide has provided you with a comprehensive set of tactics and strategies that, if i
implemented, can significantly increase your chances of building a successful startup program.
However, it's equally important to be aware of potential pitfalls, traps, and mistakes that you should avoid while developing your program.
Being mindful of these potential challenges will help ensure that you navigate the process smoothly and prevent any missteps along the way.
Passive Demand Generation
Embracing a passive "build it and they will come" mindset won't effectively drive demand for your startup offer.
Merely listing the offer on your website is unlikely to generate significant interest, potentially leading you to doubt the viability of a startup program.
If you are genuinely committed to running a successful startup program for your company, active demand generation is crucial.
As highlighted in the earlier section, putting effort into generating demand should be taken seriously.
Passive demand generation approaches typically fall short of desired results and is a mistake many companies make.
Treating startup customers like normal customers
Typically, software companies heavily discount their products to appeal to startups. However, servicing these customers in the same manner as paying ones can lead to challenges.
The discounted pricing can eat into the cost of acquisition, potentially resulting in wasted time and resources on early-stage companies that may never convert to paid customers.
This is a common mistake companies make – applying the same in-depth onboarding and implementation process to startup customers as they do to paying customers.
As a consequence, employees may feel frustrated when these startup customers don't convert, perceiving their efforts as wasted.
To address this, it's essential to strike a balance in providing a streamlined onboarding process for startup customers, ensuring they receive necessary support while managing resources efficiently.
HubSpot realized this early on in their startup partner program, as Kelsey Aina explains “Our overall goal when managing startup customers is to create value and eliminate roadblocks, we have done this at HubSpot through low touch, automated onboarding interspersed with provision of valuable resources for our startups”
By optimizing the approach, you can create a positive experience for both customers and internal employees, fostering a sustainable startup program with better chances of long-term success.
Not Launching a competitive offer
As discussed in our section on selecting an offer for startups, competitor research holds significant importance.
To truly launch a startup program that drives substantial business, you must be proactive in crafting an aggressive offer for startups. Particularly if you are a company that is less well-known than a competitor providing a discounted rate to startups, be prepared to undercut their pricing.
In a landscape where startups are seeking ways to save money, a common mistake to avoid is not presenting a compelling offer upfront. Offering an enticing deal right from the start can serve as a powerful tool to generate a considerable influx of new business
Examples of Great StartUp Partner Programs
In conclusion, it's essential to highlight some of the most effective and successful startup programs in existence today.
These companies have mastered the art of creating compelling startup programs, which have led to a continuous influx of early-stage startups signing up for their tools.
Consequently, many of these startups have evolved into significant revenue generators for these businesses.
HubSpot
HubSpot's startup program is renowned for its comprehensive suite of marketing, sales, and customer service tools.
The company offers early-stage startups access to a powerful set of resources at a discounted rate, giving them a competitive edge in their respective markets.
By enabling startups to efficiently manage their customer relationships and execute effective marketing strategies.
Moreover, in addition to offering heavily discounted access to their software, HubSpot provides additional value through a robust ecosystem of educational materials and support empowers startups to navigate the complexities of growth, solidifying their position as a trusted ally in their journey to success.
AWS (Amazon Web Services)
AWS Activate, Amazon's startup program, has revolutionized the cloud infrastructure landscape for startups.
By offering credits, technical support, and training resources, AWS provides startups with the tools they need to scale efficiently and cost-effectively.
This program has become a catalyst for innovation, allowing startups to focus on building groundbreaking products and services without worrying about complex infrastructure management.
As a result, AWS has become the platform of choice for many successful startups, contributing significantly to their growth and global reach.
Conclusion
A startup partner program can bring immense benefits to your software company, providing a pipeline of high-potential companies that can eventually become a valuable revenue source.
To build a successful startup partner program, you need to take various steps, from defining the offer for startups to devising strategies to reach as many startups as possible.
Though it may be a complex endeavor requiring patience and planning, following the steps outlined in this guide will set you on the path to creating a successful program.
If you're interested in building a startup partner program and want a convenient way to list your perk and expose it to numerous VCs and their portfolio companies, consider exploring the Builtfirst platform.
Builtfirst allows VCs to create white-labeled perk marketplaces for their portfolio companies, and as a software company, you can easily list your perk, making it discoverable by these companies.
To discover more about how Builtifrst can scale and enhance your startup partner program, book a demo today.
Additionally, for more partnership-related content, feel free to explore the Builtfirst blog.
