10 elements of a successful corporate accelerator
There is no one-size-fits-all model, but several common elements endure with successful corporate accelerators. Here are a few:
Set the right corporate objectives
Strike a balance between strategic and financial objectives. Strategic objectives include learning, access to research and development (R&D), and market and competitive intelligence through the participating startups. Financial objectives include recouping costs or achieving a return on investment.
The specifics of each objective are dependent on an overall corporate strategy, but balance is key.
Stay thematically focused
Innovation is an act of discovery, creativity, failure, and learning. It sometimes reveals ideas and possibilities that could not have been achieved without the innovation process.
Take the Post-it from 3M. The sticky-note product was created in a lab when a chemist failed at making a strong adhesive. The inventor's curiosity led him to experiment with the weak adhesive that resulted. His learning led to more experiments, which eventually led to the Post-it product launch.
Innovation for the corporate accelerator must balance the need for embracing and exploring the unexpected while focusing on specific types of problems to solve.
Some startup accelerators are focused on solving a specific problem or set of problems within their industry. Others are more generally focused on a theme. Either approach is fine depending on the corporate culture and strategic objectives. Co-ordinate with business units to define the best themes or problems for the accelerator to address.
Become a network broker
In launching an accelerator programme, make applicable startups aware of the programme, what it offers, its themes, and key deadlines.
A proactive outreach will build a positive reputation and credibility within the startup ecosystem — key to a sustainable corporate accelerator programme.
Begin by engaging with the ecosystem around the accelerator's identified themes. Find startups, venture capital firms, angel investor networks, co-working spaces, other accelerators, and professional conferences.
Cold-calling and emailing is a slow way to start. But with each good connection, more introductions become possible. And give back in the form of your own introductions, market insights, and industry knowledge.
Go beyond capital
The most promising startups have the easiest time raising capital. They can be discerning in whose money they accept as investment. Therefore, the value proposition of any corporate startup accelerator should go beyond capital and should include market visibility, access to customers, access to expertise, and credibility from association with the corporate.
Engineer opportunities for startups to engage with customers so they can test and learn first-hand. Consider an approach through which startups are taken through a formal curriculum of topics relevant to the established corporation and its industry.
Finally, recruit high-calibre experts and relationship brokers to mentor, coach, and advise the startup leaders. These advisers may find intrinsic value in volunteering their time, but they may also find value in influencing the strategic direction of the startups, gain market insights themselves, and become future investors or acquirers of the startups.
Structure simple terms
The terms of participation in an accelerator should not limit a startup's future success or ability to raise capital at a later stage. With few exceptions, terms should be uniform for the entire group of startups selected for the accelerator at a given time. Terms may include restrictive permissions to use the established corporation's brand, commitment of the startup to participate in formal events of the corporation, and information sharing.
Depending on the accelerator's objectives, terms may include equity or an agreement for future equity through a convertible loan or other instrument. Terms should be simple yet tight enough to lock in mutual participation for the duration of the programme.
Create internal value
Diffusing the entrepreneurial perspective and market know-ledge throughout the corporate organisation should always be a driving goal of a corporate startup accelerator.
Business units may not always be able to add value to startups but may be able to learn from them. Startups tend to be much more agile, nimble, quick, and adept at handling failure than the typical corporate business unit. Business unit heads and technical experts alike should try to see what startups see in the market and to understand the startup's approach to addressing market needs. Facilitated interaction, mutual problem-solving, or even co-creation with business units can yield value for both.
Be willing to accept failure
Most startups fail. The startups that do succeed often have pivoted several times and may eventually change industries or create new ones. These successes are based in part on their ability to experiment, fail quickly, learn, and adapt. Corporate startup accelerators will inevitably select startups that fail. But such instances can be celebrated as learning experiences in what markets may or may not want.
Be a good partner
Trust, communication, and acting on mutual interests are hallmarks of good partnerships. That's how established corporations should treat startups in their accelerator programmes.
Instead of withholding potentially valuable information, the established corporations should share it. Startups will appreciate the transparency. Corporations should also broker connectivity with other corporations, startups, vendors, and venture capital groups for the benefit of participating startups.
The bottom line for being a good partner is for established corporations to do for startups as they would want to have done for them if the roles were reversed. All of this builds the corporation's credibility in the startup ecosystem, enabling it to attract quality startups in the future.
Staff it with the right talent
Leaders of corporate accelerator programmes often have a background in startups, venture capital, or management consulting. The ideal leaders will bring a mix of an entrepreneurial it-can-be-done attitude, vision, superb communication skills, and a keen sense of how to navigate corporate politics.
In designing, launching, and scaling a corporate accelerator programme, leaders may face criticism and resistance from the business, especially units that may feel threatened by the innovations being pursued. This can be diffused by the soft hand of the accelerator leaders and by ensuring that the CEO and other senior executives are aligned and supportive.
Create a win-win-win
The most provocative and enduring startup accelerators create a win for the startups selected for the programme, a win for the corporation and its business units, and a win for the industry in which it operates. By adopting this philosophy, it is possible to be stronger working together than by working alone.
Nurseries of innovation
Successful startups are laser-focused on solving a specific market need, have excellent product-market fit, pivot quickly in the face of failure, and often have a small staff of nimble professionals who cultivate a culture of innovation. Fundamentally, there are five ways that corporations can innovate with and through startups.
How to know if a startup accelerator is right for your corporation
For established corporations, the startup accelerator model is a relatively low-risk and inexpensive way to innovate. To determine if the accelerator model is practical and viable, consider these key questions:
How big and active is the startup ecosystem? Growth in the number of startups, including those receiving venture funding, is a good indicator that the established corporation’s industry is transforming. Progressive corporations will seek to be part of these innovations rather than subjected to them later.
How willing is the corporation? Securing senior executive sponsorship is necessary to successfully launch and sustain a corporate startup accelerator. Making the corporation’s board and senior executive team proud of the accelerator’s approach, accomplishments, and impact will provide the internal credibility needed for business units and staff to embrace the opportunity. Equally important is the corporation’s willingness to invest time in genuinely helping startups with access to knowledge and key relationships.
Is the entrepreneurial culture valued by the corporation? A key benefit of a corporate accelerator is the knowledge, insight, and general entrepreneurial perspective that the corporation can gain. The corporation’s culture must be willing to see, hear, and accept startups’ perspective. Conversely, the corporation must be willing to share, guide, and help startups.
Mark S. Brooks is the associate director of innovation and strategic partnerships at the Association of International Certified Professional Accountants.