Convertible notes: the missing muscle in corporate partnerships

Every large company says it wants partners.

They speak of “ecosystems,” of “co-creation,” of “strategic alignment.”

They build innovation centres. They hire VPs of Strategic Partnerships.

They go on roadshows, host summits, and publish glossy PDFs about agility.

And yet - when it’s time to build something real - they stall.

They demand speed, then mire the process in months of compliance.

They preach flexibility. They operate like a medieval church.

They speak the language of risk… but never stake a thing they’d miss.

Because the truth - the awkward, unspoken truth - is this:

Most large companies aren’t structured to partner.

They’re structured to acquire.

To control.

To consume.

But to truly partner - to share risk, upside, and urgency - that muscle has atrophied.

The Value Capture Problem

Here’s the quiet asymmetry that kills most deals before they ever begin:

A billion-dollar company shakes hands with a fast-growing startup.

The rhetoric is equal. The value isn’t.

That same $1m. in new revenue?

To the startup, it’s transformative.

To the corporate, it’s rounding error.

Why? Because they live in different financial worlds.

The startup trades on hope - maybe 10x revenue, sometimes more.

The corporate trades on history - maybe 1.5x revenue, if they’re lucky.

So when the deal delivers, the startup’s valuation might double.

The corporate’s? Moves not a jot.

The result? Misaligned urgency.

The startup burns to deliver.

The corporate strolls.

The startup’s investors demand upside.

The corporate’s managers fear risk.

And when the moment comes to act - to commit capital, to greenlight rollout, to push the deal through the gears - the machine jams.

Not because the strategy was wrong.

But because the incentives were.

Equity, Too Early

Sometimes, corporates try to close the gap with equity.

“Let’s invest,” they say. “We’ll buy in early. Get on the cap table.”

It sounds smart. It feels strategic.

But more often than not, it derails the very thing it’s meant to support.

Why?

Because that money comes too early.

Before value has been proven.

Before trust has been earned.

Before the business case has a heartbeat.

It brings with it:

• Weeks of diligence

• Internal politics dressed as “governance”

And the startup? They didn’t come looking for capital.

They came looking for traction.

They wanted distribution, not dilution.

Access, not ownership.

The result?

It’s the corporate version of saying “I love you” on the second date. Then sending in the lawyers.

The equity distracts. The deal drifts. The value dissolves.

Too much, too soon, from the wrong part of the house.

The Smarter Move: Convertible Notes That Follow the Value

There’s a better way. A quieter way. A grown-up way.

Don’t lead with ownership.

Lead with belief - belief in the value you can create together.

Use a convertible note - not as a power play, but as a performance contract.

Here’s the model:

• The corporate makes a small investment - via convertible debt

• The note carries a light touch: low coupon, minimal governance, no headlines

• Crucially, it only converts into equity if the deal delivers - if pre-agreed KPIs are met and strategic value is real

If the partnership fizzles?

The note is redeemed. Quietly. No harm done.

If it flies?

The note converts - and both sides share in the upside they created, together.

This is what strategic looks like:

Incentives that bite.

Structures that flex.

A clock that ticks for both sides.

Because urgency is not a posture.

It’s a function of having something real at stake.

Operationalise It — Or Stop Pretending

If you’re serious about building partnerships — prove it.

Not with slogans. Not with slide decks.

Not with a LinkedIn post from your “ecosystem lead” about how excited you are to learn from startups.

Build a mechanism.

One that lives inside the business.

One that doesn’t need five levels of approval.

One that moves as fast as the founders you say you want to work with.

Here’s what it looks like:

• Pre-approve the convertible note structure

• Ringfence a modest pool of capital

• Empower commercial leaders to deploy it - directly, quickly.

No new fund.

No new team.

No glossy PR campaign about how you’re “leaning into innovation.”

Just a tool - simple, elegant, unsexy - that ties delivery to reward.

Because if your partnerships team can’t offer upside for outcomes,

then they’re not a strategic function.

They’re an inbox.

And every founder worth a damn will smell it.

Strategic Means Shared Stakes

This is the line in the sand.

A strategic partner is not someone you like.

It’s not someone you learn from.

It’s someone who wins when you win - and loses when you don’t.

Everything else is noise.

So stop trying to act like a startup.

And start building like a partner.

Skin in the game.

Tied to real outcomes.

Delivered at speed.

That’s not just strategy.

That’s commitment.