White-Label is the New Black for Startups

By Startup Issues

I’ve been seeing a lot of white-label deals for startup clients in the past couple months.

For example, Big in Japan struck a deal with CBS Interactive (CNET) to white-label ShopSavvy as the custom app “CNET Scan and Shop.” Also, ParaTweet came to terms with Royal Caribbean on a white-label custom app used for a private Rihanna concert on board Oasis of the Seas — the world’s largest cruise ship.

A white-label product or service is a product or service produced by one company (the startup) that another company rebrands for their own use or distribution. The company desiring to rebrand the startup’s product or service may just want to overlay their custom skin on the startup’s app. More frequently, the company will also request the development of new features for the white-label app.

Here’s my completely unsupported thesis of why large companies are approaching startups to do white-label deals:

2007 – Large company learns about social media and smartphones.
2008 – Large company learns about social media apps and smartphone apps.
2009 – Large company determines it would be nice to have large company-branded social media and smartphone apps & that it would be easier to strike a deal with a startup rather than start from scratch.

White-label deals can be great for startups because it allows the startup to obtain cash, recognition, and/or a strategic partner. The startup can expand their network and extend their runway without giving up equity. And if the startup is hoping to attract venture capital or other investment, the client and revenue is a bonus.

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