Focus and evolve – what to remember to help corporate accelerators survive and thrive

Accelerator programmes, at their most basic level, are designed to kickstart the development of young company.  

But corporate accelerators are a bit of a different beast. They have to exist within the context of the large organisation they operate in and much like corporate venturing units, their purpose is not just to make money while helping startups, but to also bring value to their corporate.

If all goes well, startups get an immediate boost to their credibility, a better chance to grow without need of external capital, a chance to grow their customer base quicker with access to corporate resources and sales channels, expert mentoring, and the opportunity to expand their network internationally. Corporates, for their part, can stay abreast of changes in the market, get access to external innovation at a relatively low price, and get themselves get new revenue streams from it.

Not all have been successful, though. According to data from CB Insights, some 60% of corporate accelerators in 2016 were failing after two years, with only 14% of them doing more activity after two years than they were at launch. Coca-Cola, Disney, Barclays, Microsoft and Deutsche Telekom are just a few of the big multi-nationals that have seen accelerators go under in the past.

Here are some quick but important best practices to minimise the chance of yours being among them.

Have a clear focus and alignment with the corporate

The first thing you need is a clear raison d’etre – you can’t just go into it thinking you can do a bit of everything. Pick an area or theme, and go after it with laser focus.

“Be clear about your goals, know your budget. What do you want to achieve and what can you afford?  Know the limits of your own organisation,” says Christoph Huning, managing partner at NMA Venture Capital, who works in an advisory capacity helping corporates set up CVCs, accelerators and venture-clienting initiatives.

“If you are running a corporate accelerator, if you are a big international corporation, then you should for sure know which part of it you’re looking for startups for.”

If you try to be all things to all people, you may well end up with a disjointed programme, focused on too many different things and not being able to offer the same level of support to each startup.  

But perhaps the strongest factor that leads some corporate accelerators into oblivion is a lack of strategic alignment with the corporate.

Setting unrealistic expectations of what the corporate and the startups can get from the accelerator and each other can easily lead to frustrated parties and an unsuccessful programme.

You need to have a good handle on the relevant metrics for both. This goes just beyond how many collaborations you want between them, but what they each ultimately want to achieve through it. The corporate is often looking for lagging indicators like market expansion, contribution to EBITDA (earnings before interest, taxes, depreciation, and amortisation) and other, less tangible strategic benefits, while startups seek more immediate metrics like customer acquisition and retention, investment, and contacts. Being on the same page in terms of the scope and timelines of the collaborations between them, with clearly set milestones and deliverables, is vital.

Always be evolving

If you don’t put in the legwork to adapt to a changing ecosystem, you risk losing ground to other players that are popping up to help startups with their growth. Never forget that the structure and design of the accelerator should not be set in stone.

“What I would avoid if I was a large enterprise thinking about an accelerator, or an open innovation program, would be to set it and forget it,” says Laura Plunkett, executive director of startup engagement at LiftLabs Comcast NBCUniversal, an accelerator focused on generative AI startups.

“You really have to see what the market is doing and evolve with it.”

For the accelerator she runs, that evolution has come in several forms, chief of which was the move away from the traditional model where the accelerator would take equity, opting instead for one that prioritises working relationships with Comcast and puts pilots in place for each startup. The obvious trade-off there is that they forego a direct stake in the company’s future in exchange for immediate value creation for the corporate.

While the programme is a relatively short one – reduced from six weeks last year to five for the latest cohort – it moves very quickly.

“By week two we had already started the procurement process and by half-way through the programme we had built a pilot side-by-side with the business units,” said Andrei Papancea, founder of customer engagement AI platform NLX, last year when they were announced to a cohort with LiftLabs.

Another Comcast accelerator moving away from the traditional model is its sportstech programme, which is run by Boomtown Innovation. While it does take some equity, its goal is not for the startups to get investment at the end of it, but to generate as much revenue and strike as many deals as possible. Investors are far less willing to take a risk on companies that don’t have proven revenue streams.

“What we found is the earliest stage companies, they would have awesome conversations. They might do a proof of concept, they’d get a case study out of it. But it’s very hard for them to get deals done quickly,” says Chris Traeger, executive director at Boomtown, who heads up Comcast’s sports tech accelerator, on a recent episode of the CVC Unplugged podcast.

“When you approach a major corporate, from the minute you have your first conversation to the minute the contract is signed, it can be 12, 18, 24 months.”

Their approach has been to extend the length of the programme to consequently extend the scope of the interactions its startups can have with corporates, resulting in a nominally six-month programme that is, in reality, longer than that given the ongoing contact they have with the cohort companies.

Communicate constantly

Much like running a corporate VC unit, having a clear and effective communication channel to keep the corporate aware of what you’re trying to achieve, and the value you bring, is crucial – especially if your accelerator is not directly related to the corporate’s main business.

“The bigger the corporate is and the farther are you away from the core, the less people don’t know about it or see the reason behind it,” says Huning.

If people don’t know about you, you’ll likely find yourself fighting more for budget as business units try to take more for themselves. Communicate in clear terms about how the company is actively benefiting from your programme, and constantly highlight success stories.

Did a cohort startup go on to win some investment? Did they strike up a commercial agreement with the corporate? Are you seeing evidence of tangible ways that onboarding the startup’s technology is benefiting the company? Don’t be shy about tooting your own horn.

Pick the right startups

The most important part of any accelerator, of course, are the actual startups taking part, but corporate accelerators don’t always have the luxury of the power law, where a small minority of successes will make up for the majority of failed cohort companies. Getting your selection right will make or break the programme.

In the corporate context, that means not just picking the ones that have the most solid business and leadership, but that will fit best with the corporate, thematically and culturally.

“We do a lot of pre-vetting with our [corporate] colleagues to make sure that we’re selecting startups that have a soft landing spot when they arrive for the accelerator,” says Plunkett.

“[Linking startup to corporate] is very much about knowing what the organisation needs and being intellectually honest about whether or not that’s something that the market also needs. Just like a startup would be doing with product-market fit we’ve had to do that with our corporate accelerator”

Making sure the companies are coachable, and above all, ready to potentially collaborate with a large corporate, is hugely important.

“We want to make sure that the buyers of the products and services are philosophically on board before we bring any company in. We don’t want to set expectations that we’re going to get a deal done and then nothing happens at all. Having those companies ready to do deals – having enough insurance, enough runway – things like that are really important to us,” says Traeger.

It is also crucial to make sure your cohort is the right size for your accelerator – and the corporate’s – ability to absorb what they have to offer, while offering enough back. Taking on more startups than you can handle is a surefire way to frustrate them and potentially see them back out.

“Don’t over pace it and bring too many startups at too many points at the same time, because if some of these early projects fail, everyone will know about it,” says Huning.

“It’s super frustrating for a startup when you invite them, then you onboard them, and then no one has time to work with them.”