Why Corporate Accelerators Do What They Do

Having setup Airbus Corporate Accelerator (Bizlab) in Bangalore and interacted with many others, It was insightful to see the various objectives behind and associated challenges.

For those uninitiated, a Corporate Accelerator is a form of startup incubator which is setup by corporates for mid to late stage startups. An acceleration program is run for a fixed period (range: 4-12 months) whereby startups are provided mentorship, space and sometimes capital support. Some corporate accelerators also host internal projects.

Corporates have either of following two primary business objectives, each comes with its own challenge:

1.  To build customer base: For some corporates, startups are potential large customers of tomorrow. Hence, corporates select startups based on their business potential and provide required support to help startups scale their business.

For instance, Microsoft acceleration program helps tech startups to scale up while using Microsoft technologies. Bosch supports startups to build their products with Bosch sensors and also launch new business around their products. Intel provides hardware startups with design support and Intel's own processors, boards (Eg: Curie), chipsets etc.

Challenge: The main challenge which a corporate faces is to give support on business aspects for a startup to grow in its target industry/market. Each startup can have different target industry/market and a corporate will not have in-house expertise in each. Corporates tend to hire serial entrepreneurs and startup mentors to fill this gap. 

2.  To find innovative ideas to improve business: In this case, corporates see startups as potential partner/supplier for innovative solutions. Corporates define their interest areas in terms of technologies & applications and select startups with innovative products/solutions in the same. During the acceleration program, a Corporate would expect startup to pivot and solve the need of their company or industry.

For instance, Target work with startups to enhance retail experience. Lowe's, Lbrands, Airbus also have similar objective to drive-in innovative solutions from startups into their business.

Challenge: The challenge here is very different from that in previous objective. The main challenge here is to work with its internal departments to find the right problem to solve, secure their commitment and launch projects. Sometimes internal departments are reluctant to work with startups. 'Not Invented Here' syndrome and internal politics also add to the challenge.   

 In addition to the above primary objectives, there are other benefits which a corporates expects to derive with accelerators :

• Introduce entrepreneurial mindset and way of working in the organization
• Accelerate internal projects by hosting them in acceleration program
• Identify and hire talent in specific areas of technogly and business
• Enhance corporate image and marketing for talent attraction and retention
• Review and Qualify deals (startups) for corporate venture/partnership

A Corporate Accelerator is a win-win for both corporates and startups. Startups stand to gain with access to Customers, Industrial Problem statements, Subject Matter Experts and Mentors, Investors and overall exposure.