Startups Serving Startups

One class of startup companies is those that are formed to sell primarily to other startups. There are pros and cons associated with serving other startups

The Cons

• Startups don’t have much money!
• Startups are composed of some of the scrappiest work-arounders alive; they want to work around you
• Startups want to sell more than be sold to

My point is not to discourage those who travel that road. It is simply to say that serving startups, especially as a startup idea, has challenges.

The Pros

• Startups are often willing to try out new technologies, so in those cases, it is sometimes very beneficial to have startups as your early adopters
• Also, news travels rapidly through startup circles, so it’s a great source of initial clients and momentum
• Startups are also often willing to provide case studies for other startups, which is vital to put up on your website as soon as possible

Examples

Here are ideas I’ve seen where startups are serving other startups:

• a litigation startup that helps other startups with interesting IP get patents and sue others in their market as a money-making exercise (i.e. turn your startup into a troll)
• a paper-pushing startup that helps other startups apply for SBIR grants
• a technical development startup that does the technical work for other startups in exchange for some cash or some equity
• startups that help with recruiting or other business functions

The closest we’ve come to paying for other startups’ services is with RingCentral and Braintree. We started using both of those when they were really young. But both of those were clearly well-funded and strongly positioned when we selected their services.

What are your thoughts on startups that service other startups?