Stuart Marks, chairman of L Marks, discusses how corporate tech accelerators can help UK startups.
The recent explosion in the number of accelerator programmes has naturally benefited the startup community and many fledgling companies have acquired a vital injection of funding that has fast-tracked growth.
Corporate accelerators have proven especially popular, and some of the country’s largest companies have launched their own programmes.
However, there is growing skepticism among startups around the value offered by some corporate accelerators.
While many provide excellent opportunities for developing companies, others are offering little more than an extended investor due-diligence programme with the possibility of funding at the end.
With so many programmes currently available, many have already warned that we’re currently facing an ‘accelerator bubble’ and supply will soon outstrip demand.
If the model is to continue to be viable – and nurture the UK’s tech scene at the same time – corporate accelerators must ensure they provide most value possible to startups.
Here are some steps corporates can take to avoid the common traps faced by the accelerator industry – and the traits startups should look for in any programme they’re thinking of applying for:
The worst charge levelled at a corporate accelerator can be that it’s a PR exercise, an example of ‘dad dancing’ as big business tries to bask in the reflected excitement of the UK tech community.
In my experience this is largely untrue – accelerators require corporates to invest a lot of time, effort and resource, and it’s difficult to justify this with a collection of headlines.
However, big businesses should still ask themselves what they want to achieve out of their accelerator programmes.
Equity in the next unicorn will likely never overshadow a corporate’s primary earnings, so financial rewards are not a reason to launch an accelerator.
Corporates should undertake accelerators recognising that it’s a reciprocal relationship and there’s a lot they can learn from these nimble, exciting startups – whether by getting early sight of the latest tech or by injecting an innovative mind-set into their own business.
Getting buy-in from key members of the senior team is vital, and outcomes should be agreed internally during the early planning stages.
This should stop drastic changes being implemented mid-way through the programme.
Playing to strengths
Programmes that lack clarity can prove disastrous for both sides, and corporates should be clear – both internally and when seeking applicants – about how their intake will operate and what kind of companies should apply.
There’s no point in opening a programme to all sectors if the corporate specialises in financial services, for example.
Corporates should play to their strengths and design a programme that caters for startups in their industry, but should also be clear from the outset on what kind of companies they’re looking for.
An assortment of back-end tech startups and companies developing consumer products will require a wider variety of mentorship, and resulting in a disconnect between the business and start up that results in them learning little from each other, let alone the designated experts.
Knowing the value of expertise
The investment on offer from corporate accelerators is certainly an attraction for startups, but with the wide array of funding options available, accelerators must provide more than a simple cash injection.
Most programmes last for between 10 to 12 weeks, and for nimble startups that’s a lot of time to dedicate to an exercise that may or may not result in funding.
The corporate accelerators that thrive recognise that growing companies apply to programmes because of the expertise and customer insight on offer, not because there’s an opportunity to make money.
Startups see the immense value in working alongside and forging potential collaboration opportunities with the leading companies in their sector, yet only a small number of programmes make a concerted effort to provide these experiences.
The best corporate accelerators are those that pull in credible internal mentors – senior directors who can provide new perspectives alongside crucial advice – and ultimately have the authority to drive any resulting long term relationships forward.
They also provide the start ups on the programme with access to their own industry-specific data that fledgling companies would never normally have access to, such as customer trends or market predictions, for example.
Many corporates have a unique advantage over accelerators that cater to a wide range of sectors – businesses leading their field possess the kind of expertise that can transform a growing enterprise into a market leader.
Yet too many continue to draft in external mentors (often with high fees) and ignore the wealth of internal experience and resources at their disposal.
A change of mindset
There’s a natural discrepancy between the attitudes of nimble, fluid startups and the more methodical – some would say cumbersome – corporate culture.
Too many corporate accelerators insist on a one-size-fits all approach, believing that startups should adapt to their practices.
In my experience, corporate accelerators operate most effectively when both sides compromise and learn from each other.
Steps to take can be relatively straightforward, such as appointing a third party to act as a facilitator and mediator between the two sides or providing mentors who are available not just during the day but also after hours, when many startups are still working.
The best corporates don’t just give but also accept constructive criticism, adapting to the challenges set by start ups and enhancing their own commercial offer within an environment that is rapidly changing.
Applications for the L Marks and John Lewis accelerator JLab close on 8th May 2016.