Cracking Corporate Deals Jigsaw Puzzle — Part 1

  1. Building Enterprise Grade Product
  2. Improve their product functionalities by learning nuances of the domain
  3. Validation of the solution on scalability
  4. Global Expansion
  5. Increased access to funding
  • Lack of experience/exposure of working with startups especially within critical enabling functions like Legal & Procurement
  • Business team’s prior experience of working on low touch model with large vendors
  1. Performance Risk
  2. Stability & Scalability (Tech, Security)
  3. Maintenance — SLA Adherence
  4. Uncertainty about the future of the startups and potential impact on business
  5. Mergers & Acquisitions
  6. Bankruptcy
  7. Product Evolution (Revamp of Technology Stack)
  • Availability of Documents — Ensure you have all the key documents ready. E.g. If you wish to have better credit terms then ensure you have a MSME certificate
  • Key Clauses — Typically large corporates work with their standard contract templates which would have many clauses that would critical from corporates point of view and they may designed for services/ consulting / product offering from large vendors and hence it is critical for the startup legal counsel and founders to appreciate this and be prepared to highlight the must-have clauses from their perspective and explain in detail the rationale for the same. Also ensure that you provide mitigation approaches and controls to ensure that customer business is not impacted by the M&A, Bankruptcy & Product revamps.
  1. Minimal or No Capex Investment: Any capex intensive projects might not be preferred in many companies especially in the current times, hence to put a foot in the door, a commercial model which require minimum or no capital investment could be an good option. If it is not viable then look at a model that does not have significant upfront capex investment e.g. For Hardware capex, you can come up with “Infra at lease” approach instead of one-time upfront cost.
  2. Risk-Reward: If you have proven capabilities with other customers, you could follow approach of having a fixed fee to cover your expenses and create a reward bucket that you offer to charge only if you meet the success criteria that you will jointly agree with stakeholders and put it in the contract document.
  3. Gain Share Model: If you are very confident of the value you could generate, you could propose the gain share model i.e. charging % of the value generated only once the benefits are released by customer.

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