Large corporates are looking to innovate from the inside out with accelerators, incubators, and other startup programs. Corporates are trying to tie in new developments that startups can ideate and test at a much quicker pace than a vast, cumbersome enterprise with 1000s of employees in multiple locations all over the world. But are these collaborations good for startups? And do the different programs, in turn, also have successes and great collaborations with various startups?
In the panel “ Accelerator and Startups” at AsiaBerlin Summit last year, we spoke about the various types of programs on offer (from corporate programs to privately initiated ones to those for specific topics only or those bound to a certain time frame) and which pitfalls to avoid in order to make the collaboration a success for both sides. Here are edited excerpts from the panel:
“The difference between the two can be explained depending on the stature of the companies and how quickly you want to scale up. If you want to scale up quicker, then an accelerator will be more suitable. They are often based on the revenue model providing co-working space on rent etc. However, incubators offer more than that. They offer a hands-on approach.”
According to a TechRepublic article, Accelerators “accelerate” growth of an existing company, while incubators “incubate” disruptive ideas with the hope of building out a business model and company. So, accelerators focus on scaling a business while incubators are often more focused on innovation.
Stephen’s organisation Technopolis implements the network “Europe India Innovation Partnership” on behalf of the European Commission. With over 100 programs, they connect incubators and accelerators from Europe and India in this network and help them organize startup exchange initiatives.
Alexa Gorman, SVP and Head of SAP.iO EMEA Foundries, talks about seed-stage investments in startups as they have been into it for almost three years and have made thirty investments worldwide. The strategy is simple- this program helps startups to integrate into the solutions provided by SAP.
“We have a network of accelerators which are called ‘Foundries’. We run specific Acceleration Programs for particular themes and industries, which are two per location in a year with roughly eight startups per program. We offer startups access to SAP’s customers. We help them scale by opening doors to over 450,000 customers that we have worldwide.”
Most of the Acceleration programs, especially by SAP, run around themes. They work along with solution management to define the gaps wherein they would not work. They form a solution jointly with select startups and work with them for three months in a very focused fashion.
An Acceleration program has a double advantage. It primarily helps build an open ecosystem of complementary innovative solutions for startups around the portfolio provided by these organizations. In turn, the customers are exposed and have access to pre-integrated solutions of these startups to define integrated used cases & value propositions. Business developers start working with them on their go-to-market plan within their customer base. There are very clear goals like integration completion and publishing solutions in the market-based app. The customers can access these solutions. Goals around the deals between startups and the customers are also well stated. This creates a win-win-win approach for startups, customers, and Acceleration companies.
Accelerator Programs Across Borders
Vivek Kumar, Launch Manager, Entrepreneur and Co-Founder, Excubator says,
“We have been active in this ecosystem for a very long time. We have seen how startups in India have evolved over the years. At Excubator, we are one of the largest VC funds enterprises. We have 12,000 startup founders on our platform working with us having access to 80+ large enterprises and connected to 30+VC funds for early-stage investments.”
The focus for Excubator is to develop deep-tech companies. India, on the whole, is evolving from a B2C market to a deep-tech market. Covid has also accelerated organizations in the B2B space and be more orientated towards unit economics.
Accelerator programs in India have developed very rapidly. There were value propositions like mentorship, giving guidance, and providing product integration in 2014. Most of the founders are now looking beyond product development or mentorship. In present times, they seek network access, global outreach, and product growth.
“Nowadays, there is a competition in terms of which acceleration program is well suited for the founders. In a way, it has already created an ecosystem where corporate Accelerators are also trying to redefine their offerings.”
Through his experience, Stephen noted that there are certain similarities in how incubators and accelerators work in India and Europe. Certain accelerators in India have affiliations with universities, and few are also linked to corporates. His organization brings people and organizations together from these two regions. There are specific cultural differences like communication and commitment which need to be ironed out.
Accelerator Programs by Corporates: How are they evolving?
Alexa commented, “Lot of startups know what they need and what they want. It is a matter of jointly defining the goals during the program. There is no wastage of time and resources if both (corporates and startups) work towards each other’s goals.”
The situation in acceleration programs has changed in the last five years. It has become a lot more structured and professional. The startups understand they cannot join many programs at the same time. Startups define the integration and check if the program can support them. This helps both sides. It leads to greater commitment.
The startups are about their expectations from accelerators. They know what they are looking at and have a focused vision.
Corporates’ approach has become contextualized. They have changed their way of reaching out to these startups. They assimilate their problem statements. They then reach out to the ecosystems and focus on particular startups that can quickly become part of their program and scale their solutions. This has led to better outcomes for Accelerator programs in the present times.
Stephen also suggested that Accelerators do not have to wait for problem requests from multinationals. They can think about the prevalent problems, bring together a team of start-ups, and reach out for collaboration on the same. They are already working on similar models for Food Waste Problems in India. Some companies were working on this issue. So, it worked very well within their network.
Accelerators and startups have a lot to learn from each other. They both need to be aware that there are differences and should accept them positively. Every startup will one day grow into a bigger organization. They can learn a lot from these accelerators through their challenges.
The road ahead: What are accelerators focusing on?
Recently, accelerators have increased their focus on sustainability-related topics to add value to their programs. Issues related to United Nations’ Development goals are looked at. Funds for research for topics like clean-tech and renewable energy productions will also be in for a lot of attention. The present health crisis will also increase the focus on health-based research.
Vivek says, “In India, startups are paying a lot of attention to the experience of the team members who are part of this accelerator program. They should have experience of good scaling companies. So, they are not looking at corporate experience only.”
Another area where corporate accelerator programs have differentiated is the way they engage with the ecosystem. They need to go beyond providing guidance only for products. They need to step up their interaction with these startups in various other areas, which will help them grow faster, like a kind of workforce to hire, business development plans, and the right kind of mentoring.