Corporate accelerators: Spurring innovation with a page from the Silicon Valley playbook
Hungry for groundbreaking ideas and technologies? An emerging innovation tactic is gaining momentum.
As companies increasingly focus on innovation to set themselves apart from the competition, a growing number are taking a page from the Silicon Valley playbook and setting up corporate accelerators to nurture start-ups. It’s a trend that CMOs—who increasingly are expected to be innovation catalysts—may want to note as they seek to create breakthrough offerings and new revenue streams.
How much traction is the trend gaining? In the past three years, corporations have launched more than 105 accelerators globally, with 47 of those in 20151. These corporate accelerators are similar to traditional accelerators in that they typically make small equity investments, generally up to $50,000 in a cohort of early-stage companies, in exchange for a four to six percent stake in each, and then actively support them to help the start-ups grow. Yet while traditional accelerators generally have the goal of seeing a return on their equity investments, corporate accelerators tend to be focused on gaining access to new concepts and technologies for competitive advantage.
As for adoption models, corporations launching accelerator programs can either run the program in-house or outsource administration to a partner such as Techstars, LMarks, or Nest. In the partnership model, the partner markets the program, reviews and selects start-ups for each cohort, provides mentors, and manages the program. Of corporate accelerators launched over the past three years, half used an accelerator partner, Deloitte analysis found.
With investment and management considerations—and no guarantees of successful outcomes—why are corporations taking the leap?
For those sponsoring an accelerator, the potential benefits include:
- Insight into emerging technologies and trends
- Rapid, cost-efficient research and development (R&D)
- Economic returns (if a start-up is acquired or goes public)
- Access to high-caliber talent
For start-ups, a corporate accelerator can offer some benefits that traditional accelerators typically do not, such as access to equity-free funding (in some cases), industry-focused mentors, corporate resources, and future customers.
As of now, the corporate accelerators that have launched are concentrated in two industries that are being transformed by digital technologies. Fifty percent of corporations that have launched accelerators are in the technology, media, and telecom industry, while 23 percent are in financial services.1 Companies in those industries should pay particular attention to the trend, but corporations in other industries may want to explore the tactic as well. Though accelerators are just one way to boost innovation and the model likely will evolve, they could lead CMOs and their C-suite counterparts to their next game-changing new idea or technology.
Published on August 23, 2016
1 Corporate-accelerators.net, augmented with additional research and analysis by Deloitte LLP.