Finding the right partners means balancing maturity, adjacency, and concentration risk.

Let’s start with maturity:

• Early-stage partners (pre-Series B) lack infrastructure. Contacts change monthly. Processes shift constantly. But they're hungry, flexible, willing to experiment.

• Large companies have bureaucratic processes, extensive requirements, and you’re a low strategic priority. But once approved, you access massive distribution. Do you have resources for lengthy approval and ongoing requirements with uncertain outcomes?

• Series B to pre-IPO companies are often the sweet spot - established enough to execute, hungry enough to care.

Next up is adjacency:

If they’re too adjacent, you risk future competition. That said, early partnership engagements can reveal valuable intelligence and might lead to an acquisition.

Too distant on the other hand often means minimal customer overlap - but might open unexpected segments. The key question here: Is there enough mutual dependence to sustain partnership through changing priorities?

Last but not least, be mindful of partner concentration risk:

• <20% from a single partner: Healthy diversification

• 20-30%: Monitor carefully, diversify actively

• 30-40%: Strategic risk

• >40%: Existential dependence

Above 20%, strategic decisions increasingly require partner consideration, negotiating leverage disappears, and acquisition options become limited.

Now, if you do decide to partner, be mindful of the fact that partnerships are a lot of work and not all partners deserve equal investment.

Make sure to tier them. Here’s an example of how you could go about that:

Tier 1 (Core Partners):

• >15% pipeline overlap, >10 deals/quarter

• Full feature parity, dedicated resources

• Maximum 3-5 partners

Tier 2 (Strategic Partners):

• 5-15% pipeline overlap, 3-10 deals/quarter

• Core features only, quarterly check-ins

• 5-10 partners

Tier 3 (Opportunistic):

• <5% pipeline overlap, <3 deals/quarter

• Basic integration, self-service

• Unlimited but unmanaged

Based on long term potential of the partnership, they can move tiers too.

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Enjoyed reading this?

Then check out my conversation on the focal podcast with Natasha Ratanshi-Stein, Founder and CEO of Surfboard, a rare example of a company that was able to nail partnerships from Day 1 and exited successfully to Dialpad after raising a $5M seed round.

Youtube | Apple Podcast | Spotify

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