Put the pedal to the metal
Can accelerators slipstream startups and enterprises into the fast lane?
We've identified four ways enterprises are adapting so they can be disruptive in marketplaces they already dominate. In the third part of the series, we look at the role of accelerators.
Once you’re valued at more than £50million, changing the trajectory of your enterprise is notoriously difficult. But ‘accelerator’ programmes are currently du jour for those keen to discover their disruptive mojo. Here in the third part of our series, Stephen Pritchard takes a look at how and why…
There are a few non-negotiable tide-marks in business.
The entrepreneur faces the challenge of moving from startup to scale-up. And today’s large enterprise has to contend with continual reinvention. Having won its initial market share it can decide to stand still and slowly wither – or continue to innovate, create new markets and strengthen revenues.
But what if there was a single solution that could work for both startups and large enterprise?
See those two birds? Here's the one stone
The ‘Corporate Accelerator’ has been touted as this 2-in-1 solution. The idea is that an enterprise, looking for the next big thing in its patch, sponsors an accelerator to invest in – and work with – disruptive start-ups looking to scale.
Many have bandwagon-jumped. Household names from Barclays to GE – as well as Virgin Media – run accelerator programmes. And some have gone big. GE recently set up a $50m fund to accelerate health care startups. And Barclays operates fintech accelerators, not just in London but in New York, Tel Aviv and Cape Town as well.
"The involvement of large corporates in accelerator programmes is driven by the need for innovation," says Bruce Dines, of Liberty Global Ventures. "Innovation used to be about allocating R&D budget, but that’s no longer fast enough. Instead, backing emerging new businesses and helping them grow is essential if we want to continue to drive our markets. If we’re not innovating, we’re putting ourselves at risk."
There's two benefits too
But what is an accelerator? Typically, it means fledgling businesses are funded and mentored by an investment-based company, usually in return for equity. It should help those businesses grow faster than possible otherwise – via access to mentors, customers, ideas and people that might otherwise be out of reach. Traditionally, it ends with a ‘Demo Day’ where potential investors are invited and c.£1m is sought in further funding to continue the journey.
There are two main benefits to be gained by enterprises getting involved as well and backing accelerators.
Firstly, early access to technology. This often includes tech that may not yet be available in the marketplace as it is being developed by a specialist group of programmers with a bespoke task in mind.
"Given how quickly technology can transform industries, established businesses understand that to stay competitive they need to not only understand the technology products being built for their industry, but also need to use the products and ensure quick adoption company-wide," notes Mary Criebardis Singh, programme director at Pi Labs, an accelerator focused on the property industry.
"These businesses get involved with accelerators so they can get early access to these products and to understand the innovation trends that will affect them."
Secondly, accelerators provide access to talented people. After all, startups are often melting pots of undiscovered workers, who might otherwise struggle to get noticed.
"This means established firms can use accelerators to promote innovation and find innovative solutions to retain and expand internally generated IP,” says Paolo Valdemarin, co-founding partner at Activate Capital, a technology-focused accelerator.
The big boys are climbing abroad
As disruption continues to impact all areas of business, more and more enterprises are waking up to the value of accelerators. BMW is a case in point.
"Good accelerators are those where corporates are transparent and honest about why they’re running these programmes."
Jonny Combe, who runs BMW Group's Financial Services Innovation Lab
"We admitted from the start that we were new to acceleration and launched the programme because there are challenges within both our business and the wider industry that startups can help with. Only by being transparent like this can this collaboration succeed, in both our industry and acceleration."
Microsoft is also getting in on the disruptive act – and benefitting from a new wave of innovation.
"Through accelerators we work with startups that have the capacity to scale global across borders,” says Kevin Monserrat, chief marketing officer of Microsoft’s London accelerator. “For Microsoft, it is about accelerating the pace of innovation, enabling enterprises to do more. We have always been devoted to enabling businesses and since the pace of innovation is incredibly accelerating, Microsoft helps corporates and start-ups to collaborate."
So, accelerators are seeing to it that even the awkward relationship between long-established and fledgling enterprises is being disrupted. And there’s no doubt that – for the majority of startups joining the programmes - the experience is positive.
Repairly: the participant's experience
Fraser Williams, co-founder of smartphone and tablet repair business Repairly, admits that it took his "third stab" at starting a business, before coming up with a viable idea. Williams, who was backed by the Virgin Media accelerator, says the process forced him to ask tough questions about the business.
"The mentors shattered some of our ideas, and then put them back together," he says. "We had some pivots in the business model… but an accelerator is right for the business if you feel you have a strong idea, and some early signs that people will use it. And you need to be at the stage where you need guidance.
“If you are ready to learn and grow, it is right for you. Virgin Media and TechStars have done unbelievable things for us."
Look out for the fourth part in the series coming soon