Why Institutional Investors should Partner with Dynamic and Successful Startups

 

Why Institutional Investors should Partner with Successful Startups

At first glance, the idea of a startup and an institutional investor under taking a serious long partnership (or business collaboration) seems to go against the fundamental DNA of each kind of business. By their nature, institutional investors are quite conservative and seek to mitigate risk taking through the use of rigorous (if not rigid) internal controls and processes. A startup company, on the other hand, often lacks internal controls and tends to seek aggressive growth with little regard for mitigating potential risk(s). In light of such clear (and real) culture clashes, why should these type of companies collaborate at all?

As it turns out, there are plenty of reasons why these two very different types of organizations should actively and frequently collaborate in the business world. In this series of articles, we are going explore why institutional investors of all types actually need to work with startups to become successful and to remain competitive in the long term. There are five separate reasons why institutional investors need to actively work with dynamic and successful startup companies:

1) Learning about new and rapidly growing market(s) or industries,

2) Learning how to lower the long term risks of the institutional investor,

3) Learning creative management approaches and improved problem solving skills,

4) Enhancing the returns and performance of the institutional investors, and

5) Identifying and creating new and flexible ways of managing business risk.