The insurance industry is not known for its speed. It can be highly risk averse and prone to lengthy decision-making processes that lead to challenges when trying to collaborate with startups. Startups are often at different stages of development and therefore carry different inherent risks. The more mature, growth-stage startups are easier to collaborate with as they typically have a proven solution and business model in place and are more likely to remain sustainable. Younger ventures are riskier, but have a wealth of innovative ideas that are often the source of great differentiation. They are also cheaper to invest in. So, established firms need to find a way to strike the right balance when evaluating the two.
Collaboration Poses Risks and Challenges
The risks associated with early stage startup-corporate collaboration typically center on the fact that the concept they are developing is new and untested. That’s why it’s difficult for corporate champions to introduce such a startup to the most relevant business units, and so it takes time for startups to meet with the right people. The use of standards, data privacy issues and the risk of reputational damage also play on the mind of the business, as well as finding a way to ensure that the startup won’t get absorbed by a competitive entity and disappear.
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