One of the most powerful yet often overlooked factors VCs evaluate in startups is their potential for distribution partnerships. These strategic partnerships can transform a company’s growth trajectory by opening doors to new customers, adding credibility, and breaking out of slow, one-to-one sales cycles.
For startups in regulated industries, these collaborations are even more critical. Partnering with trusted institutions accelerates market access, boosts innovation, and reduces risk. The right partnership doesn’t just increase sales—it can elevate a startup into a trusted industry leader.
How BILL Got It Right With Distribution Partnerships
BILL is a textbook example of how to approach partnerships strategically. It didn’t rush in. Instead, it first focused on direct sales to small businesses, refining its product and establishing trust. Only after proving product-market fit and gaining traction did it start building relationships with accounting firms and banks.
That approach paid off. BILL pioneered the B2B2B go-to-market model, showing that startups could grow through strong ecosystem partnerships. Inspired by this playbook, companies like HighRadius, Gusto, and Melio followed suit. Today, many banks and fintech platforms offer programmatic reselling and distribution tools, further validating this model.
How Startups Can Build Strategic Partnerships
1. Nail the Basics First
Startups should not rely on partnerships from day one. Begin by validating your product, building customer love, and hitting your first few million in revenue. A strong Net Promoter Score (NPS) and logos of happy customers give you leverage when approaching bigger partners.
If your product needs technical integration, don’t wait. Use public APIs or simple export/import options to simulate integrations. Corporates won’t invest in a half-baked tool. Show value first.
2. Identify the Right Partners
Once you’ve proven your value, figure out who your customers trust. These trusted players should form your distribution target list. Start small—regional banks and niche service providers can be valuable early collaborators. Offer generous terms to co-develop and learn what works.
Iterate, improve, and document your success. Over time, you’ll refine your B2B2B strategy and attract larger partners.
3. Founders Must Lead the Charge
Don’t delegate partnerships too early. Enterprise deals are high-stakes, and junior team members may not have the authority or context to build trust with senior executives. Founders should lead initial discussions, supported by go-to-market or product leads who manage follow-ups.
Once you close a few deals, you can justify hiring a dedicated business development leader.
4. Start Simple: Email Campaigns Work
Before full integration, test the waters with a joint email campaign. It’s low-risk and offers fast feedback. Select a few hundred ideal customers from your partner’s list and co-author a referral email. Track click rates, optimize messaging, and learn what resonates.
Skip complex revenue-sharing at this stage—if you’re doing most of the heavy lifting, you can often avoid referral fees during testing.
5. Play the Long Game
Enterprise partnerships take time. From the first conversation to execution, expect one to three years to see results. Without an engaged senior stakeholder on the partner’s side, progress will stall.
But don’t fully walk away. Keep the relationship warm. You never know when priorities shift—and when they do, you want to be top of mind.
Strategic distribution partnerships are one of the smartest, lowest-cost growth levers a startup can use—especially in regulated or fragmented markets. Be patient, stay focused, and lead with value. The payoff can be transformational.
