A bigger company has just made you an offer. They want to stock your product through their network, or put money in for a stake, or build a new product line alongside your team. It is a flattering and exciting moment, and it can genuinely accelerate growth far faster than going it alone. It is also the moment to slow down, because the structure you choose now will decide who owns the IP, who carries the liability, and how much control you give up for the next several years.
The structural options in front of you
In Australia the term corporate partner does not name a legal form, it describes a commercial relationship. Behind the label there are really four workable structures, and once you understand them the choice narrows quickly:
- Supply and reseller arrangements: You stay completely independent and sell your product to the corporate, which on-sells or resells it within agreed territories. Money flows as sales price, and no equity changes hands.
- Equity investment: The corporate buys shares in your company, usually takes a board seat and agrees growth milestones. It becomes an owner alongside you.
- Joint venture (JV): You and the corporate build something new together, whether a separate JV company with its own directors and bank account, or a purely contractual JV on an existing project.
- Referral, affiliate or co-marketing deals: The lightest option, where you share commissions or run joint campaigns without deep integration.
Two warning notes. First, the word strategic partnership is not a structure at all, it is a label slapped over one of these four. Second, some options look distinct but produce the same outcome, so do not let branding drive the choice. A corporate that wants a long exclusive relationship with your team and your margins is really asking for a reseller deal with tight terms, not a JV. A corporate that wants product influence and future upside is really angling for equity. Match the label to the substance.
How to choose: the factors to weigh
How much integration do you actually need
The first test is how joined at the hip you want to be. Start with the lightest model that proves the idea works. A referral or co-marketing arrangement validates demand and builds the relationship without locking you into a long exclusive deal. A reseller agreement adds real product volume while keeping you fully independent. You only reach a JV when the project genuinely needs both teams working inside a single venture, and you only reach equity when you want the corporate to share the risk of ownership.
If you cannot answer what is actually being built together, you are not ready for a JV. A corporate that wants your product on its shelves needs a distribution agreement with agreed pricing, territories, minimum order volumes and service levels, not a brand new company.
Whether the corporate wants a stake in you
Equity changes the relationship from customer to co-owner, and it should only happen when you genuinely want capital and strategic support rather than just a distribution channel. If you take investment, the terms that matter are valuation, what share of the company the money buys, board composition, reserved matters that need shareholder consent, pre-emptive rights over future issues, anti-dilution protection, and drag and tag rights on any future sale. On the other side of the table, a corporate that offers to invest is often more interested in locking in your product and your roadmap than in the dividend yield, so separate the money from the commercial terms and price each honestly.
Compare that with a pure distribution relationship. There you are selling goods, not selling influence, and the agreement should concentrate on order volumes, minimums, marketing spend, warranty and returns, and who carries the product liability. The margin you give up on each unit is a price you can review at renewal, whereas the control you give up with an equity stake is far harder to claw back.
There is a hidden cost to equity that small business owners routinely underweight. Once a corporate is a shareholder, it has information rights and a say in major decisions. Your constitution and a shareholders agreement must line up, because the shareholder deal shapes how you can raise more money, take on debt and eventually exit. If you only want a customer making volume orders, do not sell them the farm to get it.
How ring-fenced the liability needs to be
This is where the JV decision really bites. A contractual JV involves no new entity, so each participant generally remains liable for its own obligations, which sounds clean. But there is a trap. If the parties carry on business together with a view to profit and share the returns, the regulator can characterise the arrangement as a de facto partnership. Under the Partnership Act 1892 (NSW) s 24, a partnership is the relation between persons carrying on a business in common with a view of profit, and partners are jointly and severally liable for the debts and wrongs of the firm. That means you can become liable for the corporate's obligations and take on fiduciary duties you never intended.
A JV company avoids that by giving the venture its own separate legal personality, board and bank account. The price is that it must be incorporated, governed, taxed and eventually wound up. For a high-value, long-lived project where you fear liability leaking back to you, the cost of the separate company is usually worth it. For a short, contained pilot, a contractual JV with clear contribution and liability clauses can be enough.
To see the difference in practice, take a twelve-month pilot where you and a manufacturer co-develop a product line. Run it as a contractual JV and hold back the confidential design and any tooling in your own name, and the pilot can be shut down cleanly if it fails. Run the same pilot as a shared profit pool with joint hiring and a common bank account, and you risk a court reading it as a partnership with all the joint liability that carries. The level of shared infrastructure is the tell, which is why agreements for these arrangements spell out whether each side brings its own assets and keeps its own staff.
Who creates the IP, and who should own it
There is no default rule that assigns ownership of IP created inside a partnership or JV, and assuming one exists is the most expensive mistake in these deals. Under s 35 of the Copyright Act 1968 (Cth), the first owner of copyright in a literary or artistic work is generally the author, which means the people you and the corporate put onto the project, not the businesses funding it. So new software, product designs, marketing materials and written documents created during the collaboration must have ownership dealt with expressly in the agreement.
The cleanest approach is to keep each party's background IP with that party and decide the fate of foreground IP, the new IP the project creates, up front. Decide whether one party owns it outright and licences it to the other, or both own it jointly with agreed rights to exploit it. Whatever you choose, put it in writing, because the default is that creators end up owning it.
What competition and consumer law allows
Exclusivity is the commercial term corporates push hardest for, and it interacts with Australian competition law. Under the Competition and Consumer Act 2010 (Cth), cartel conduct such as price fixing, restricting output or allocating customers or territories between competitors is prohibited by s 45AA. Resale price maintenance, where a supplier dictates the minimum price a reseller can charge, is banned by s 48. Exclusive dealing, where you supply a distributor only on condition it does not deal with your competitors, is caught by s 47 but only contravenes the Act where it has the purpose or effect of substantially lessening competition. The practical upshot is that a little exclusivity with real performance thresholds is usually manageable, but fixing on-sale prices and carving up markets is not.
Separately, the Australian Consumer Law (ACL), which is Schedule 2 of the Competition and Consumer Act 2010 (Cth), continues to protect end consumers no matter how you structure the deal. Under s 64 the consumer guarantees cannot be excluded or limited by contract, and under s 3 a person who acquires goods for under $100,000 or for personal, domestic or household use is a consumer. A corporate that on-sells your product is not itself a consumer because it acquires for re-supply, but its customers are, and product liability for defective goods can reach back to you as manufacturer regardless of your deal with the corporate. Allocate that responsibility, and who holds the relevant insurance, in the agreement.
Your stage and risk appetite
Finally, be honest about where your business is. If you are at an early stage and simply want to test whether working with a big corporate is viable, a referral deal with clear lead ownership and commission rules is the right proving ground. If you are established and want volume, a reseller or distribution arrangement delivers it. Equity only makes sense when you are ready for the governance and reporting a shareholder relationship demands, and a JV only earns its complexity when the project is big enough to justify it. Work backwards from the risk you can carry, not forwards from the size of the prize.
Where an Artificer Legal practitioner helps
You can read this far and still not know the answer, and that is normal, because the right structure depends on judgement calls only you can make alongside someone who has seen these deals fail. An Artificer Legal practitioner will stress-test the assumption that the corporate's promise matches the commitment you are signing up to, model the downside of each structure for your particular facts, and then draft the documents the chosen path needs so that money, IP, data, governance and exit are all consistent across a single suite. Getting this wrong is expensive to unwind, because once a JV has been running or a corporate holds shares, restructuring is far harder than getting it right at the start.
The structure that survives the first real argument
The single sharpest point from everything above is that there is no structure you should default to, and any structure that sounds fine at the negotiation table needs to be tested against what happens three or four fights in. The corporate that wants exclusivity will push for it, the corporate that wants a stake will resist losing control, and the IP you assume you keep is the IP that quietly becomes the author's by default. Decide the structure for the day things turn difficult, not the day everything is exciting.
To recap, bring a corporate partner in on the lightest structure that proves value, add integration only when the project and your risk appetite justify it, keep each party's background IP separate and settle foreground IP in writing, treat de facto partnership as a real hazard of contractual JVs, and make any exclusivity proportionate and competition-law aware. Match the structure to the substance of the deal, protect yourself with the right agreements from day one, and get advice before you sign, not after the first dispute.