Partnerships: critical for start-ups and social entrepreneurs?

The right partnerships, agreements and interactions with stakeholders (particularly government) can make or break an inclusive business start-up. In fact last year’s report on the Innovations Against Poverty (IAP) programme found that external partnerships was the biggest constraint faced by IAP-funded companies at the time they received IAP support.

The importance of partnerships during the early stages of business development is something that is quite interesting and unique to observe in Innovations Against Poverty. Many IAP companies are start-ups or in the initial phases of conceptualizing, prototyping and testing new products, services and business models. For these companies, partnerships are essential to help extend their technical expertise, knowledge of ‘what works’ in the local context, and how to develop radically affordable products and services that are also desirable by low-income consumer groups.

Makit, for example, has used partnerships to understand and reach its BOP customers in an efficient and low-risk way. During the product development and testing phase, the company worked with local partners, including future vendors, to understand the cultural and behavioural context for its Ruby Cup menstrual hygiene products. They learnt valuable lessons about how women and girls perceive the product, which have now been integrated into the product design, branding and sales process. They also use partnerships with NGOs and social enterprises as an effective distribution model to reach women and girls living in slum areas. These partners act as intermediaries, taking micro-consignments from Makit and then managing the distribution and sales through their established vendor networks. In this way, partnerships have enabled Makit to reach its target market in a much simpler way than if they had tried to establish a sales network themselves.

For other companies, partnerships are integral to the success of their business model. Swedstream, for example, is establishing low-cost ultrasound check-up services in Uganda and Tajikistan. The concept relies on digital and electronic systems developed by Swedstream’s medical and technical partners such as Karolinska Institutet and the Royal Institute of Technology in Sweden. By leveraging these partners’ systems, Swedstream will be able to conduct remote diagnostics, transmit and process relevant information and make appropriate clinical decisions. Swedstream also partners with NGOs and government agencies that will help perform clinical trials in Uganda and Tajikistan, conduct market analyses and provide guidance on the company’s commercial strategy. Together, these alliances give Swedstream the complementary technical, medical and commercialisation support it needs to successfully deliver its inclusive business model. The partners’ contributions are in the form of know-how, staff time, financial investments, access to resources such as electronic health systems as well as insight and reach into local communities.

Indeed it is a rich network of relationships, partnerships and collaboration that allows inclusive business to flourish. A group of MBA students recently visited IAP projects in Uganda and explored how these companies are using partnerships as part of their business strategy. Their blogs on Pamoja Cleantech and Eco Fuels Africa identified a broad range of alliances including with research institutions, NGOs, community groups, and government agencies.

Looking at the experience of IAP companies in comparison to some of the more mature ventures funded by the Business Innovation Facility, I am still left wondering about the relative importance of partnerships to inclusive business start-ups. Are partnerships more or less relevant to early stage ventures than their more mature counterparts? Are some types of partnerships more relevant at early stages than others? What can we learn about effective partnering for start-ups and social enterprises? While there is a wealth of literature and wonderful resources available on partnering in general, do we need specific guidance for inclusive business start-ups and social entrepreneurs?

Welcome your views, experiences and comments!