In the recent years,Pakistan has seen a boom in the start-up landscape. It’s almost everyday thatwe hear about a new start-up popping up, some better and more promising thanthe others, and there’s a hope that by time as these new companies mature, theywill be the ones pulling the economy of Pakistan up. These new emergingstart-ups have also managed to attract millions of dollars of fundings fromVenture Capitalists impacting the job industry of our country in positive ways.Let’s understand how these start-ups work and why is it important for them tohave these partnerships in the first place.
What are strategic alliances and partnerships?
Strategic alliances are usually established to combine together the variety of complimentary skill sets of the two organizations. In strategic alliances, the two companies hold their individual identities while working towards a mutual goal. They share their resources, either tangible or intangible to achieve the mutual goal. While retaining independent corporations, the companies contribute assets to the alliance, and these assets are frequently included distribution networks, expertise, and other tangible or intangible resources.
However, partnerships lead towards a separate entity that is jointly owned and operated by the two original companies. It helps businesses equally share the profits and the losses incurring from the business. Partnerships foster synergy, combine their sources and expertise of several businesses or people, split responsibilities, and produce something new that is frequently better than the sum of its parts. While some partnerships concentrate on pooling resources, inventories, and equipment, some partnerships are solely concerned with profits.
Benefits of Strategic Alliances and Partnerships
Strategic partnerships enable partners to expand quickly, develop cutting-edge client solutions, break into new markets, and pool relevant experience and resources. This is a game-changer in a company environment that prizes creativity and efficiency. A few of the benefits of strategic alliances and partnerships are listed below:
· Increased knowledge and resources: A strategic alliance brings together the best attributes of both businesses. This could be a better comprehension of the product, sales or marketing expertise, or simply just having more people working together to accelerate time to market.
· Expansion into new markets: In some instances, a strategic alliance provides access to fresh markets with a solution that neither business could have provided on its own.
· Facilitates innovation: Partners can outperform the competition with cutting-edge solutions that come as a full package for their clients with the help of the appropriate alliance.
· Reduced Costs: The desired goal of a company can easily be accomplished by utilizing the expertise or resources of another firm without incurring the costs and overheads itself.
How Do These Start-ups Work and Raise Funds
It’s quite common to hear that an ‘abc’ start-up has raised an ‘x’ amount of funding. What does this mean and what happens with all this money? It all starts with an idea, an idea believed to be revolutionary enough for the company’s managers to be passionate about it and an idea with enough profit potential to be able to attract investors. Investors are people or institutions looking to make money in the long run. These institutions will invest in companies that they feel will make them good money and provide them with a good return on their investments. A new company needs funds to smoothly run its operations and to grow and expand. In order to attract investors and their money, the owners of these new start-ups have to pitch their companies in a way that would get them money from these investors and show some deliverables that would be achieved in a specific timeline in order to have the investors on board. This is a very short summary of how a new start-up raises funds. This kind of funding is more commonly known as crowd funding where a venture is invested in by multiple sources, whether they be organizations or individuals. These investments are risky for investors and there is no guaranteed return. There have been examples of start-ups failing because of mismanagement of resources or simply because the idea couldn’t be turned into a working reality, one of the famous examples for thisis Airlift along with Swvl shutting down its operations. There are alsopromising start-ups that have managed to attract a good number of investments,like Sadapay ($20M), Bazaar Technologies ($108M), Finja ($15M), Abhi ($19M),etc.