When pitching a corporate venture capital firm, startups should keep in mind the unique benefits that these funds provide. For us at JetBlue Technology Ventures (JTV), that’s access to JetBlue’s 45 million customers (and counting!), 20,000 crewmembers, and an incredibly dynamic operation with flights to 25 countries.
My role as Operating Principal is to understand the needs of JetBlue’s leaders so I can provide startups with candid feedback and coaching to align their products to the company’s business challenges. I like to think of my work as fitting product to market for the business-to-business and business-to-business-to-consumer startups we work with.
Below are the three most common questions I hear our parent company ask founders and practical advice on how to tackle these particular challenges.
1. Do you understand the problem?
As a founder, you are not only selling what you have created; you are helping your prospective client to see it as a solution to a problem they are trying to solve.
For startups, this means isolating the proof points that are relevant to each corporate entity. In the case of JetBlue, if you’re hoping to partner with JetBlue Vacations, you should elevate the features of your startup’s product that solve real pain points for families from the Northeast traveling to Florida and the Caribbean, a key segment. For technology that focuses on our fleet, highlight use cases on Airbus narrow-body aircraft and the Pratt & Whitney engines on their wings. And for any startup, emphasize your experience in working within a highly regulated industry, as airlines are famous for operating in.
Then make the job easy for your business champion. Think two steps ahead when evaluating the business case, and make it easy for them to pass something along to their leaders proving the value of your product. Does it cut cost or increase productivity? Will it grow revenue or boost customer lifetime value? Make some educated assumptions and put a number on it. Not only will this win over your sponsors, but it will quicken the process and get you an answer faster.
2. Can you actually do it?
Corporate clients don’t always expect a fully developed product or prototype. Traction can come in many forms, especially for early-stage companies. So, how can you prove that your idea can actually be executed? As table stakes, business units want to see that you’re hypothesis-driven and well-informed based on expert inputs.
If you’re looking to learn and demonstrate even more traction, a proof-of-concept process might be a good fit! At JTV, we partner with you to provide your startup with exposure to JetBlue’s crewmembers and customers, allowing you to test assumptions and gather real-world data. We hope that as a byproduct of this process, founders learn something new about their business model and continue to pivot and grow.
3. Will you be viable?
Lastly, corporate leaders want to know that you’ve thought about how your product will integrate with existing business systems and operating processes — and that you’ll still be around two or three years from now. To that point, think ahead to how employees will use the technology. In the case of JetBlue, it’s one thing to create a mature customer relationship management backend that will record a customer’s drink preference; it’s another thing entirely to think through how this will fit into the service delivery that an inflight crewmember performs during a busy flight.
Beyond technical practicalities, business units will want to see that you will survive your high-risk growth state, particularly when low-risk yet low-innovation incumbents are their opportunity cost. So, how can David-sized startups get taken seriously in the corporate sourcing process alongside mighty Goliaths? One method is demonstrating that your sales pipeline is both broad and deep. While everybody loves the individualized attention associated with being a pilot client, a diversified income stream reassures corporate leaders of your longer-term viability. Significant runway is not only important for investors, but also for clients who know that you’ll be there long enough for the capital that goes into cutting over to be fully depreciated.
Another approach is to shorten time horizons. Prioritize opportunities that turn over quickly so you can establish initial credibility and build from there. For example, if an airline like JetBlue is looking to sign a five-year contract, see if they’d be willing to lower it to two years so you can get your foot in the door. While many times, an airline might be constrained and unable to shorten a contract term — whether due to the switching costs or certainty that is required in business partner selection — consider such responses to be valuable feedback: either that company is not willing to innovate, in which case you’re not a good match, or something in your business model needs to adjust to be able to compete with incumbent players.
While this isn’t an exhaustive list of questions I receive, if you’re prepared to tackle them head-on, you’ll be leaps and bounds ahead of the competition. Corporate venture firms like ours can be a valuable strategic partner in amassing feedback so you can pivot and hone your approach, even when a financial partnership isn’t the right one. Accordingly, don’t count them out when raising your next round, but come prepared when it is time to talk!
