GTM Navigator: Executing proof of concepts with large organizations
GTM Navigator is our ongoing series where we break down the essential components of nailing the right go to market strategy.
In this episode, Stephanie Perez, Managing Director of Business Development and Partnerships at Fin Capital speaks with longtime product and strategy executive, Paolo Vincenti, about all things POC: what they are, how to execute them successfully, and the nuances of building out a successful POC with large organizations.
Paolo is a seasoned product and technology executive, having held multiple senior roles at global banking institutions. His passion is scaling business, with a background in both entrepreneurship/founder ventures as well as consulting.
In this discussion, you’ll gain a better understanding of the expectations and processes of these larger institutions, how to approach POCs strategically and lay the groundwork for successful long-term partnerships. We’re grateful to Paolo for sharing his insights and hope that this episode of GTM Navigator empowers you to execute POCs with precision and foresight.
Key Highlights
What is a POC? [2:23]
A POC is not about proving the concept—it’s an experimental box for business cases, a “lab portion” to learn how to collaborate. It offers a lighter engagement model for startups to get a foothold in larger enterprises and vice versa.
POC vs. Proof of Value [2:54]
While often used interchangeably, a Proof of Concept provides data to build the Proof of Value. The real goal is not the POC itself but the robust business case that emerges from it, convincing stakeholders to move forward to a commercial relationship.
Executing a POC [4:23]
- Identify an internal sponsor who acknowledges an unmet need that your service can fulfill.
- Conduct a preliminary conversation to establish a test or outcome that demonstrates value.
- Engage in project planning, defining scope, time, cost, and mutual requirements.
- Secure sign-off from relevant organizational stakeholders.
- Choose the optimal time in the business cycle to maximize the chances of success.
Understanding the Buyer’s Business Cycle [7:07]
Large organizations operate on structured fiscal calendars. Engagements should align with their planning and budget allocation processes, typically set well in advance.
Should Startups Charge for POCs? [10:54]
Charge minimally, covering some costs of implementation without being a financial burden. Avoid triggering complex approval processes that could delay the POC.
Feature Build During POCs [13:15]
Avoid building new features during POCs. Focus on demonstrating the value of existing capabilities. Feature builds should be complete before engaging in a POC.
Defining Success Metrics [15:09]
Success metrics should be established at the start of a POC. Aim for measurable outcomes that contribute to the business case for a future commercial relationship.
Navigating the Commercialization Process [16:26]
Expect to navigate through multiple layers of governance in financial institutions. Startups should prepare for rigorous reviews from technology, data governance, legal, risk, compliance, and more.
Contracting Tips [20:41]
Work with the large organization’s existing contracting processes. Propose to simultaneously review terms for both the POC and the broader Master Service Agreement (MSA).
Considering Potential Acquisitions [23:33]
Account for the possibility that the startup may be acquired during the partnership, ensuring it doesn’t impact the quality of service delivered.
Common Mistakes to Avoid [25:02]
- Misjudging the implementation timeline of the financial institution.
- Failing to define commercial outcomes and clear success metrics upfront.
- Overlooking the importance of timing within the business cycle.
Key show notes (edited for brevity and clarity)
Stephanie Perez: We’re thrilled to have you, Paolo. We often hear from startups about selling into large enterprises but seldom from the other side. We’re eager to understand why a large enterprise like Barclays would partner with an external vendor, how those deals unfold, and how success is measured. Could you share more about your background?
Paolo Vinceti: Thank you, Stephanie. It’s fantastic to join you. Indeed, my career has allowed me to see both worlds. I started in the trenches of a startup and then transitioned into the buyer’s role in significant financial firms. I’ve worked with numerous startups, especially in the fintech sector, integrating their innovations into our institutional fabric. So, discussing this topic, which I find crucial, is something I’m looking forward to.
Stephanie: Let’s begin with the basics. What is a proof of concept, and when is it appropriate to engage in one?
Paolo: A proof of concept is somewhat of a misnomer because the goal isn’t to prove the concept per se. It’s a preliminary engagement where a fintech or startup secures a position with a larger entity. It’s a lite version of a contract to comprehend the benefits and services offered. Essentially, it’s an experimental phase that serves as a precursor to building a business case.
Stephanie: And what distinguishes a proof of value from a proof of concept?
Paolo: The proof of concept should ideally provide the data needed to establish a proof of value. Many startups mistakenly focus solely on their product’s functionality within a client’s environment. However, the true aim is to form a business case that earns ongoing support for a deeper commercial relationship, as it’s the strength of this business case against competing priorities that ultimately matters.
Stephanie: Agreed. We always emphasize constructing a business case for the buyer from the get-go. So, could you walk us through the steps of executing a proof of concept in a large organization?
Paolo: Certainly. The process’s linchpin is finding a sponsor within the enterprise who identifies with an unmet need that your solution can address. The journey begins with a conversation to identify a test or a small-scale example that demonstrates value. Both parties need to agree on the worth of this test for it to be meaningful. After identifying the need, it involves project planning, gaining internal approvals, and deciding on the timing that aligns with business cycles for the best chance of success.
Stephanie: Absolutely, understanding the business cycle is critical. Now, from a startup’s perspective, should one charge for POCs? If so, how should pricing be approached?
Paolo: Charge for the actual cost incurred during the POC. It’s not about making a profit at this stage; it’s about establishing value. You need to be wary of the financial thresholds that trigger complex internal approvals within the institution, as excessive charges can lead to unnecessary delays.
Stephanie: That’s a valuable point. One thing that we see quite a lot, and this happens a lot when you are selling against an incumbent, but we’ve observed many startups get entangled in feature development during POCs. What’s your take on this?
Paolo: I strongly advise against feature development during a POC. If you’re dead set on entering a business or offering a capability, go have the exploratory conversation with their BD and product teams, understand what the need is, go away and build that. And don’t even broach a POC until it’s built from your side. The POC should demonstrate the existing features and how they can add value to the larger organization. It’s crucial for a startup to be fully prepared before initiating a POC, as the focus should be on successful integration, not on development challenges. Doing build on your side is like homework. It should be done long before you show up.
Stephanie: Indeed. Couldn’t agree more with that. So once the POC is complete, how should success be articulated and communicated to partners and stakeholders?
Paolo Vinceti: Success criteria should be defined upfront, not post-POC. It’s about outlining measurable business outcomes and ensuring that all the necessary data is collected to facilitate analysis and construct the business case for future commercial relations.
Stephanie: For startups entering this space for the first time, what kinds of committees and approval processes should they expect in a large, regulated financial institution?
Paolo: Startups should be prepared for a rigorous vetting process that covers technology, data governance, legal, compliance, risk, and more. Any new product introduction will be thoroughly scrutinized, especially concerning data handling, customer impact, and the broader system’s integrity. Regulators require financial institutions to follow strict procedures before introducing any new products.
Stephanie: How do you suggest teams multi-thread or run different kind of work streams? One of the things that we’ve seen is perhaps having an SOW statement done work for proof of concept, potentially roll over into a larger master service agreement. What are different kind of ways that you would suggest that startups approach the contracting process in order to get involved with multiple different stakeholders across the organizations at the same time?
Paolo: It’s best to use the larger institution’s existing templates and processes. Propose a term sheet for a POC and concurrently discuss a Master Service Agreement (MSA). Be prepared to work through potentially onerous requirements and remain adaptable.
Stephanie: With fintech acquisitions on the rise, how should a startup navigate potential acquisition risks during a partnership?
Paolo: Acquisition is a risk. However, if service delivery remains consistent, it’s generally not problematic. Engaging bank leadership as advisors or board members can offer startups a voice in the acquisition process.
Stephanie: Lastly, from your vast experience, what are the most common mistakes companies make during a POC?
Paolo: Often, startups misjudge the time it takes for implementation in a large institution. It’s crucial to align timelines and testing schedules. Startups must focus on commercial outcomes, avoid getting sidetracked by less important issues, and be realistic about start dates, fitting them into the institution’s operational cadence.
Stephanie: Thank you, Paolo, for sharing your insights with all of us.