Are corporate accelerators bad for your startup?http://digitaleneuordnung.de/wp-content/uploads/2017/01/Corporate-Accelerators-1-1024x602.png 1024 602 Andreas Diehl Andreas Diehl http://1.gravatar.com/avatar/a0c0de4639b1ac6803d20ae0ea161e8e?s=96&d=mm&r=g
Corporate accelerators are outposts of (established) for-profit organisations that are designed to accelerate the growth of a startup using the corporate resources.
This post helps you to decide if a corporate accelerator is worth considering as part of your financing and growth plan. For corporates the argumentation and design is a lot more complex and will be covered in a new post (if you can’ t wait for it get in touch).
Why do corporate accelerators exist?
First, corporate accelerators exist for various reasons. I would categorise these reasons into two good and one very bad reason:
- Corporates try to get their foot early into new market segments (which they can or will not serve with their existing business model due to their own innovator dilemma)
- Corporates try to leverage their own innovation and R&D efforts
Very bad reasons
- Accelerators and incubators are en vogue these days and some of them I consider more a marketing stunt than a serious acceleration and growth program for a startup
Considerations for Startups
First of all, you should do your homework and have clear answers on these two questions:
- Is the corporate a good strategic fit with your startup?
- Who leads the accelerator, what is his job title and who is this person reporting too? A quick LinkedIn and Google Search will give you first insights. Make sure the corporate accelerator is linked to the board or any top executive on VP level.
If the accelerator is designed for the right reasons, your startup will benefit from corporate resources. In a perfect world a corporate will leverage your own growth efforts by bringing his capacities tp the table:
- trust in the marketplace
- business development opportunities
- access to R&D
- access to customers and suppliers
- know-how and mentoring
First of all, you have to understand the culture of a corporate organisation: A corporate is optimised to execute their existing business model most efficiently. Hence incentives for top executives are designed to get the maximum out of the existing business. Their ambition to protect their status quo, existing budgets and value chains is very high. As a result the mindset is clearly “More from the same”, leading to an increase of their own incentives. In contrast to that you are (hopefully) up to change the world and shake up the status quo.
As a consequence you will face situations where your ideas and approaches will be judged against the existing status quo and knowledge. Image you look bad and ask an hair stylist for advise. Guess what he recommends: get a haircut.
And last: Compared to existing revenues and cash flows your startup simply does not exist. Therefore it’ s almost certain that you will struggle to achieve alignment of interests. You will be limited in the freedom and the speed to make decisions solely in favour of your company.
On paper corporate accelerators look like a dream marriage. Yet, your startup will never be as important to the corporate as it is to you. As a result there is a high chance that you will be limited by the corporate mindset and incentives to get “more from the same”. If you know how to deal with it, this shouldn’t be a problem.
So, does this mean you should not consider a corporate accelerator? NO. One way you can frame this decision is to see the corporate accelerator not as a marriage but as an affair. And as a founder you should have a very clear expectation what to expect out of it. As a result your expectation should be reflected in the agreement including a clear path how to get out of the deal when things do not work out for you. If you have struggle to judge the match, reach out and let’s discuss the opportunity.
Finally, some more radical thoughts on corporate accelerators.
PS: The comment about co-working spaces … well, at least it’s funny. And there might be some truth in it.:)