Using corporate accelerators to build out an innovation portfolio and create an experimental, entrepreneurial culture.
Accelerators act as companies or programs which invest in and support startups to promote fast growth of the ventures. They generally connect startup founders to additional networks and resources such as mentoring, knowledge, office space and any other avenues which can help accelerate growth.
The accelerator program can act like 'an experimental playground within the framework of an organisation.' For corporations, this can be a valuable innovation and idea generation tool, that is agile and fast-paced. By removing the accelerator from the structure of the rest of the organisation, a new environment can be created and rules established which allows new business ideas to flourish, without the constraints of the organisational structure and processes.
Strategy behind the play
The core idea of a corporate accelerator is to facilitate corporate and startup teams to establish mutually beneficial relationships and flows of information.
The return horizon for accelerators generally depends on how the program is geared towards economic benefit. By investing in startups, and guiding them to grow through the accelerator, an economic benefit and financial returns for the organisation could be achieved through successful exits. In this scenario, the organisation would essentially be playing the role of an early-stage venture fund.
Alternatively, an organisation may see an economic benefit by integrating interesting or successful technologies into the organisation, either to improve internal processes or for the benefit of customers. Finally, by rapidly invalidating undesirable business concepts, an accelerator program can help an organisation avoid further investment in concepts which would ultimately be unsuccessful.
Create a place to interact with innovation, bridging the world of corporates and startups to integrate an experimental, risk-ready, entrepreneurial culture
Drive economic benefit
Discover new ideas and business models which can transform the organisation
Limitations & Risks
Corporate accelerators can cause strain on the organisation by draining resources, if they are not managed effectively.
Initiating the Play
Launching this play requires a relatively high initial capital outlay.
Key steps to initiate:
Ensure management and leadership are willing to commit to supporting the program (both financially and with time).
Find the right people to set up and run the accelerator. This team should have an understanding of organisational structures, and the process for startups. They will be responsible for creating the accelerator's building blocks and ensuring seamless integration with minimal impact on the rest of the organisation.
Assess the availability of, and secure the financial resources required. Consider how large business opportunities going through the accelerator would need to be to ensure a positive impact on the company.
Running the Play
Accelerators are a moderately resource intensive play.
A plan will need to be formed outlining how startups will be scouted and selected. Also, consider the stage of startups that will be selected, do they have a business plan but no prototype or market traction, or are they further through their journey, with a validated business model in place?
Consider the deal or contract in place, does it entail money for equity, resources for equity, or a no-strings-attached non-equity model. This marks the beginning of the relationship with the startups and will set the tone for the rest of the accelerator.
Setting up internal partnerships and support is crucial and can give startups the headstart and opportunities they need. This can include physical support such as office space or IT infrastructure or could be in the form of regular check-ins and mentorship.
To conclude the program, consider closing with a demo day to create potential further funding opportunities or internal support.
To allow the accelerator program to become sustainable and economically viable, ensure there is both a clear strategic direction and defined goals.
The process of setting up a corporate accelerator takes time and will require continuous learning and iteration to find the model which works best for both the startups and the organisation.
The accelerator team should be provided with the autonomy needed to work with the speed and agility of startups, outside of organisational politics and processes.
Play in Action
Powered by TechStars, the Barclays Accelerator is a 13-week programme run by a full-time, dedicated Techstars team.
By partnering with an external organisation to run their accelerator program, Barclays was able to offer its employees access to valuable expertise, resources, mentorship and investor relationships. Startups in the Barclays Accelerator receive £12.5k of funding in return for giving up 6 percent equity, however, the program is designed such that the biggest drawcard for startups is not the funding, but rather the mentoring and business development support. The programme culminates with a Barclays Executive Demo Day and a Public Investor Demo Day.
Techstars’ Jon Bradfordsays “There are good commercial reasons for doing this, including being around smart people and innovation from the startup community, business development and possible M&A/future investment/partnerships. But it is important to emphasise that all of the above is at the startups’ option and never Barclays.”