As a startup founder looking to develop a tech product or service, you’re constantly facing this frustrating reality:
Compromising on speed, quality, or cost could each potentially lead to failure, but you need to compromise somewhere. But maybe looking at these tradeoffs in this simple way isn’t helping. A critical part of being a successful founder is having the vision to see beyond the options in front of you and find creative solutions. That’s where tech development partners come in.
Instead of extending your runway, throwing more money into development, or even removing key features, a tech development partner allows you to craft partnerships to do more.
When does a startup need a development partner?
There are many potential reasons for bringing on a development partner, but the two essential ones are these:
When time is critical
Perhaps the biggest reason you might want to consider taking on a development partner is time. Finding and hiring the right talent to create your dream development team is a very time and resource intensive process. But bringing on a development partner can give you access to a mature and experienced team on day 1.
If you’re extremely concerned about runway or hitting specific benchmarks to raise your next round, skipping the process of building a team from scratch can be a critical advantage. It’s also valuable to know that the team you’re partnering with already has a long history of working together. This reduces the time and energy needed to build an effective working culture even after you’ve hired the right people.
Understandably, this might have you worried about being reliant on an external team for development going forward. That’s where the flexibility advantage comes into play.
When you need flexibility in hiring and team development
There are two types of flexibility which a development partner can offer a startup. The first is in hiring and building a team. Often, an agreement can allow a startup to gradually hire internal developers to replace members of the external team. This allows hiring to be done more deliberately and for the incoming team members to take on some of the effective culture of the external team.
When you need flexibility in the partnership design
The second type of flexibility to understand is in partnership design. In some cases, development costs can be deferred in exchange for revenue/risk sharing, IP control, and other tradeoffs. Deferring costs like this can both improve your runway and ensure your development partner’s interests align with your own.
Development partner examples
Here at Zingasoft, we’ve worked as a development partner with startups for 5 years and have worked to develop our own models for such partnerships. Based on all of our experience, we can share some examples of how development partnerships can work for your startup.
Founder looking for developers but not outsourcing
This client began their search with focus on trust. They wanted a dedicated team they could get to know and work well with by integrating that team into their existing culture. This is what turned them off traditional outsourcing and towards a development partner instead.
Put simply, they didn’t want the critical technical work their business was relying on to be farmed out to an anonymous subcontractor.
The other challenge this founder faced was not having the resources needed for an MVP. To solve this, we engaged in a risk-sharing partnership where delayed payments were agreed in exchange for a percentage of future revenue. This partnership structure allowed this company to start working with a quality development team quickly and affordably.
Founder needing to start at scale to optimize time to market
In this case, a company wanted a development partner which would enable them to start at scale and use our domain-specific knowledge to build a product. However, they were also interested in gradually hiring their own team to replace ours.
With this agreement, over the course of two years, the project was able to transition from being entirely done with a development partner to being almost entirely done in-house. During this time, open and transparent communication allowed for the partnership to weather challenges.
How to choose a development partner
Because you’re essentially hiring an entire team at once, choosing the right partner is one of the most important early decisions a founder can make. You need the right skillset, culture, size, and partnership agreement. But what does the process of finding a development partner look like and how should you approach it? Let’s break it down.
Understand your needs and pain points
This is the first step you can’t skip. We’ve already reviewed some advantages and examples of development partnerships, so look over those and ask yourself what you need from a prospective partner.
It’s easy to dive headfirst into listing the qualities you think you want, but the better place to begin is by considering your own needs and pain points. Only once you have a good sense of why you want to bring on such a partner should you begin listing the qualities you want in them. This way, you can be sure that what you’re looking for in a prospective partner is directly linked to their ability to meet your needs.
We recommend asking each key stakeholder to come up with their own list before meeting together to combine them. This helps ensure you get more varying perspectives and diverse ideas about what problems you need to tackle.
When in doubt, use a template
Of course, working through exactly what you need to look for in a company partner can be tricky. There’s always the possibility you’ve forgotten something important. That’s why we’ve put together a straightforward checklist for finding the right technology partner.
What to look for in a development partner
All of that said, while you should always focus on qualities that are directly linked to your own needs, there are some general things you always want to look for.
Are they flexible about partnership terms?
One of the single most important elements of a successful technology partnership is aligned interests. If you’ve structured a partnership such that it’s in one party’s direct interest to act against the other, you’re simply setting yourself up for failure. In our experience, getting creative with partnership terms has often been key to success.
By doing things like sharing risk or IP in exchange for more flexible payment terms, startups have found themselves able to achieve more with less. If a prospective partner wants to begin negotiations by dictating what terms they expect, that points to potential problems with the other important elements we’ve listed below. You want open communication, flexibility, and confidence from a partner and identifying those things begins with negotiating your partnership terms.
You can find an even more detailed breakdown of which partnership elements we focus on here.
Are they okay with an evolving relationship?
Crafting agreements that will be crucial to your startup’s success in the early days is incredibly stressful. Compared to a more mature company, it’s far more difficult to predict what your situation will be in 6 months, let alone a few years. This is why you ideally want a partner who’s open to adjusting the partnership down the line should things change.
We’ve seen this happen when a partner’s fundraising situation changes and they need to restructure a partnership to extend their runway. If both parties’ interests are aligned, they can work together in these moments to ensure the company survives and thrives instead of being another factor in their demise.
The trick is working out how to determine this at the beginning of the relationship. We recommend being straightforward about it. You might ask how they would feel about adjusting the partnership terms down the line should your situation change. Or, you might present a specific hypothetical situation to gauge their reaction. Just be sure to frame this around ensuring you have a productive relationship so the prospective partner doesn’t feel you’re simply trying to game them.
What is their communication style?
This is a big point that often gets overlooked. A development partner is ultimately a partner first, meaning you’ll be spending a lot of time going back and forth to solve problems. Often the partner won’t be based in the same city as you, so most of that communication will likely be remote. Remote communication presents a host of potential problems. Even if the work itself is excellent, communicating about it poorly can easily wreck a relationship.
There are plenty of expert articles with advice on remote communication, but it really comes down to matching styles. You can ask about how they communicate, ask an existing or former client about it, or even ask to take a look at some examples. If possible, you can try to set up a small test project to see this in action, as this will give you the most realistic picture of how your teams will work together.
Are they stable with a good reputation?
There’s no getting around the fact that no matter how carefully you select a development partner, you’re going to encounter some issues. This is where choosing a partner with a track record and good reputation is critical. Knowing that they have plenty of experience dealing with the challenges that inevitably arise when working with startups and that they have the financial stability to handle those challenges can help take a big load off your mind.
Again you can start by asking to speak with current and past clients. Whether they’re open to flexible contract terms which allow you to adjust the ratio of team members on their side relative to internal hires will also give you some idea as to how stable they are. Regardless of how you approach it, make sure you’re hiring a partner ready to stand with you when the going gets tough, because it will.
Do they have the domain knowledge you need?
You might be wondering why something as critical as domain knowledge is last on this list. Put simply, it’s important but obvious. The danger here is focusing on finding the partner with the best or most specific domain knowledge at the expense of other factors. At times, it might be better to bring on a partner that’s a better fit and is still able to adapt to your technical needs.
All that is to say, be realistic about how flexible you can be when it comes to domain knowledge. Don’t let this factor alone cloud your other judgment. Choosing the right development partner for your startup has to be a holistic decision. So get investors and co-founders in to make sure you’re taking all the major factors into account to make the best choice.
Get in touch for more help in making the right choice
Ultimately, there’s no getting around the fact that this is a rare choice to make, so it’s hard to find a good source of experience in building development partner relationships. Fortunately, we have just that experience. Please get in touch if you need some help, advice, or resources on how to make the right choice for your startup.