What Makes Startup-Corporate Collaboration Succeed: 5 Lessons From Both Sides

Michael Todd, former CTO and Head of Innovation at Henkel

We recently wrote about 3 rules for startup-corporate collaboration, drawn from patterns we keep hearing across our conversations with corporates and founders. If some of what follows here sounds similar to that article, it’s because it is. That overlap isn't a coincidence, it's a sign the same few things matter regardless of who you ask, which in this case is Michael Todd, the former CTO and Head of Innovation at Henkel, the world's largest adhesives producer.

Recently, we were fortunate to have hosted an LP-only webinar with Michael in which he shared some of his biggest learnings from a career in innovation. Michael's career runs in the opposite direction of most people who end up running corporate venture: he started as a startup operator trying to get a corporate to take a chance on unproven technology, then spent years on the other side deciding which startups Henkel should bet on. That vantage point, from both the smaller and the (much) larger side of the table, is part of what makes his take so valuable.

Both Sides of the Table

Michael has sat on both sides of the table. Early in his career, he was a lead technologist at Toronaga Technologies, a startup specializing in lead-free copper-based conductive paste and sintering inks for microelectronics and PCB fabrication. What he learned was that for a hard tech startup, cash isn't always the hardest thing to raise. Getting a real, serial-production customer willing to prove out unproven technology is harder. Toronaga eventually found that path through a competitor that became a collaboration partner, and later the acquirer, of its technology.

Michael then spent years at Henkel building and running its corporate venture and external innovation function, starting as a purely technology-driven R&D play, and evolving from fund investments to direct equity, to joint development agreements, commercial deals, and eventually outright technology acquisitions.

That range, startup founder to corporate innovation chief, is part of what makes Michael’s insight so relevant. Here are five of the most salient takeaways from our conversation with Michael.

1. Let the collaboration lead. Let the money follow.

Michael's biggest piece of advice to his younger self was to lead with the technology collaboration and let that determine where the money goes, not the reverse. Most corporates do it backwards: write the check first, then figure out how to work together. He found that money can do more good when it's used creatively in service of a collaboration already underway, funding a piece of capital equipment, structuring a take-or-pay contract, rather than as the opening move.

2. Equity doesn't buy you access to the technology.

Owning a piece of a startup gives ownership, not rights to use its technology. If the actual goal is getting your hands on a capability you don't have, equity alone does nothing to get you there. That realization is what pushed Henkel toward joint development agreements, commercial agreements, and licensing, structures that grant usable rights, rather than relying on a cap table position to somehow translate into collaboration.

3. Bring the business unit in early, and let them pull.

Initial corporate attempts at collaboration often go the wrong way: headquarters wants to invest in a startup, then hand it to a business unit and say, essentially, "figure out what to do with this." It doesn’t work. What does work is engaging the business unit before the startup conversation has gone anywhere, building a shared hypothesis about the opportunity, and letting the business unit decide for itself if there’s a fit. When the business is pulling a collaboration forward because they want it, rather than having it pushed onto them, you have a sponsor and a real shot at making it stick.

4. Know when you're a competitor, and don't try to straddle the line.

Michael shared some anonymous anecdotes about startups that turned out to be direct, one-for-one competitors rather than complementary or disruptive technologies. His test was simple: does the company already have a stage-gate R&D project running with the same objectives as the startup? If yes, a minority equity stake with an observer seat helps no one. Information can't flow either direction, nobody wants to talk to the other side, and you end up with equity in a company you can't actually work with. His view: pick a lane. Either go all in (acquire, or structure a real license or commercial deal), or don't do it at all. The middle ground of quiet, arm's-length competitive investment doesn't work.

5. Track forward-looking signals.

Financial ROI is a lagging indicator that can take years to show up, and it isn't even the right goal if the real reason a corporate has a venture portfolio is technology access rather than fund-style returns. Michael advocates for more forward-looking metrics: the number and value of sales opportunities in the CRM tied to collaboration partners, the number of joint development and commercial agreements in place, and how those collaboration-linked deals were converting compared with internally developed technology. If the goal is acquiring capability, measure the pipeline of activity that capability is generating, not just what's already been banked.

A Word for Startups, Too

Michael's advice wasn't only aimed at corporates. To startups chasing that one big-name partner, he was direct: don't assume you're anyone's top priority. A collaboration, even one with equity attached, can be a very small line item in a multibillion-dollar company's portfolio, and it can get deprioritized without much warning. His advice: get excited about the big fish, but don't put all your eggs in one basket. Go find others, and remember that a real collaboration goes beyond a term sheet. Some of the most valuable things a corporate can offer aren't capital at all: embedded engineers, regulatory and legal support, or help clearing a path in a new market. A startup rarely has that infrastructure in-house, and access to it can often carry more value than a check.

Takeaways

Michael’s experience offers the unique benefit of dual vantage points, which is why we put so much stock in his advice. He's watched these mistakes sink deals from inside a startup angling for a customer, and he's observed a few of them himself from behind a corporate innovation budget. His credibility is rare, and it shows his advice: Lead with the collaboration, understand what equity does and doesn't buy you, bring the business in early, know when you're actually a competitor, and measure the things that predict success rather than the things that lag it.