What is industrial and financial backing?
It is a strategic process through which a company partners, or “get backed” by a larger one with the aim of obtaining the industrial and financial capabilities necessary for its development.
Why looking for industrial and financial backing?
- To enhance the company competitiveness
- To access fundraising opportunities
- To improve market access
- To boost profitability
- To increase innovation capabilities.
What types of backing?
- Strategic partnership: a long-term commitment between companies of different sizes but with similar or complementary sectors.
- Technological alliance: a sharing of intellectual property and resources necessary for the exploitation of a new technology for mutual benefit.
- Joint Venture: the creation of a common subsidiary by two entities to exploit new opportunities.
Main advantages of industrial and financial backing
- Synergies: partners combine their respective forces to access more easily to new markets and/or international markets.
- Industrial resources: a partnership with a sizable industrial company provides the necessary means to accelerate growth, especially for startups and SMEs.
- More resilience : a successful backing allows united companies to overcome difficult economic periods. This strategy also enables economies of scale.
- Credibility: when backed by a larger company, a startup or SME gains increased trust from banks and other institutional investors.
In short, industrial and financial backing enables companies to extend their horizons and get stronger in a constantly evolving environment, increasingly competitive. For this backing to be successful, it is essential that partners share a common vision and that created synergies are properly managed.
Industrial and financial backing for startups
Industrial and financial backing is a key strategy for startups. It is about establishing a strategic partnership with a sizable industrial player to accelerate and secure their growth.
1. Industrial backing
This type of backing enables a startup to partner with an industrial company capable of providing manufacturing tools, a distribution network, and expertise in the relevant sector. It can take several forms:
- For innovation: a large industrial group provides the startup with technical resources that, through co-development, allow it to enter its market more quickly.
- For distribution: a large industrial group provides the startup with the commercial network and reputation necessary for its entry into the national or international market.
- Credibility: a partnership with a recognized industrial company provides external validation that improves the startup’s credibility in its market.
2. Financial backing
To offer an alternative to fundraising, Brandon Valorisation imagined industrial and financial backing for companies.
This strategic collaboration between a startup and an industrial company implies that the involved parties are driven by a common objective: business development through industry. This method, while not neglecting the essential financial aspect, does not make it the primary objective, which remains the development of industrial operations and market access.
This is why implementing industrial and financial backing first requires an objective financial valuation study of the company to be backed and its intangible assets. For this, Brandon Valorisation offers two methods: ValoFin™ and ValoFlash™.
3. Some advantages for startups
- Accelerated growth: industrial and financial support allows the startup to develop more rapidly, reduce financial risks, and get complementary expertise.
- Risk reduction: Industrial and financial backing helps reduce risks for the startup by providing solid expertise and financial resources.
- Financial stability: financial support offers the startup the stability needed to focus on its development.
- Access to new markets: a partnership with a large industrial company enables them to more easily enter new markets.
- Reinforced credibility: a startup’s backing by a recognized player strengthens its credibility with investors, clients, and other institutional partners.
Industrial and financial backing for SMEs
Industrial and financial backing for SMEs is a strategic lever for their growth and development. They can also benefit from industrial and financial partnership to overcome certain constraints and position themselves favorably in their market.
Here is a detailed explanation of this concept that takes into account the specificities of SMEs.
1. Industrial backing
Industrial backing for an SME involves establishing a partnership with an industrial company or a large group capable of providing lacking resources: technical skills, manufacturing capabilities, a commercial network, or other assets.
SMEs, often more agile and innovative than large companies, can use backing to accelerate their growth while maintaining a degree of autonomy.
Types of industrial backing for SMEs:
- Manufacturing: an SME can partner with an industrial company to outsource part of its production, focus on its core business, and thus gain greater production capacity.
- Access to advanced technologies: some SMEs may require specific technologies or expertise. An industrial backing provides access to these technologies without massive R&D investment.
- Distribution network: by partnering with a large company that already has an established distribution market, the SME can expand its customer base and penetrate new markets.
- Co-development and innovation: an SME can partner with a large group to co-develop new products or services, combining its innovation and flexibility with the group’s resources and expertise.
2. Financial backing for SMEs
Financial backing is capital or funding support from investors or financial institutions. This type of backing is crucial for SMEs, especially when they seek to grow, diversify their activities, or advance to a higher level.
This elaborate method, proposed by Brandon Valorisation, positions the financial aspect as an indispensable corollary to successful industrial and financial backing.
That is why implementing industrial and financial backing first requires a financial valuation study of the company to be backed and its intangible assets.
3. Main advantages for SMEs
- Access to new markets: a large group with an international presence can open doors to new markets for the SME, including international markets.
- Cost reduction: access to industrial resources or to larger-scale manufacturing capacities can reduce unit production costs.
- Improved competitiveness: industrial backing allows the SME to improve product quality, manufacturing processes, and expand its product range.
- Stability and accelerated growth: industrial and financial backing provides both financial security and industrial expertise from a large company, which can facilitate rapid and sustained growth.
- Better innovation capacity: thanks to the provision of know-how and financial means from a “big brother”, the SME can finance and accelerate its innovation projects.
In conclusion
Whether it is to benefit from industrial resources, a distribution network, technical expertise, or funding, an SME or a startup increases its chance of success by partnering with a qualified entity.
Industrial and financial backing is a powerful lever to support these companies in their development, reinforce their means and skills, and access new markets.
It is also a human adventure that must develop on shared objectives.
This means that beyond the financial aspects, which must obviously be considered, it is essential for the parties involved to share similar objectives and, perhaps most importantly, the same values!
It is on these foundations that Brandon Valorisation has been assisting companies with the implementation of industrial and financial backing since 1991.
Contact us to know more.
