Startup Scaling

Corporate Accelerator: To Build or Not

Underestimating their startup customers is the main reason most business accelerators fail.
Unicorn, startups, creative illustration
Min Read
May 24, 2021

Corporate accelerators are the latest must-have accessory for enterprises looking to hop on the current startup hype wave 

Enterprises fear that they'll miss out on some unicorn and become obsolete. Still, if you think the solution to all your innovation issues is to find tech talent and market yourselves as a corporate accelerator, you are wrong. Before you show your decision template to your boss stating all you need is a fancy innovation vehicle, ask yourself this one simple question: is your organization even ready to work with startups?

Dump those strategy management slides in the trash, don't invest in more innovation theatre!

Letters N and O spelling the word NO in red on a white background.

This article is certainly not a guide on building the ideal accelerator, but it sure gives you insights on how NOT to build one.

Over 200 accelerators, labs, hubs, or incubators have been ramped up in Germany in the last six years.

A couple of them have already shut down, and most failed accelerators didn't even last for two years — many demonstrating with rapid accuracy their ineffectiveness. Only a handful pays into both sides' needs and desires corporations and startups of the remaining ones. Since both worlds are very different — and only a few people have an overview of what is needed on the one hand and offered on the other hand — satisfying these desires and meeting their unique needs can be difficult.

Most corporates look for innovations, cultural change, and improved brand image by aligning both worlds. For startups, while these goals are shared, they are only the bare minimum to become interested in joining your accelerator. These goals don't include the focus and desires of the startups themselves. The corporate approach is often one-sided and oriented only around the corporate's needs. The "corporate first" orientation is also the reason why most corporate accelerators suck. They don't take into account the condition of their customers: the startups themselves.

There are also problems on the startup side. The number of startups has sky-rocketed, and it is not hard to find people claiming to be entrepreneurs or startups. Not everybody is cut out to be an entrepreneur or to start a scalable, highly digital, AI, or blockchain-driven SaaS business… but that's enough fodder for another article. 

What is becoming difficult is finding the RIGHT startups for us as corporates

In an environment that is crazy about startups, startup conferences, startup habits, startup books, startup behaviour and startup everything, I took over the position as Managing Director at Wayra Germany. I began my role in early 2017, after heading the operations at TechFounders, a white-label accelerator in the largest European entrepreneurship centre. At TechFounders, we scouted for startups for industry giants like BMW, Siemens, Adidas, Linde and MunichRE. We gained traction on "accelerating" future best in class startups like KONUX, ProGlove and Tacterion.

Whereas the focus at TechFounders was more on entrepreneurial education, the transfer of the technology and learnings to the paying organization was lacking. The same challenge is back at Wayra: creating added value for the group and impacting startup technology. In this way, no CFO would shut down the vehicle after their reorganization and cost-cutting challenge. Sooner or later, this task would affect all innovation hubs, labs, and companies due to being misused as an instrument for cultural change and innovation marketing. The result is that these players will not play a vital role on the corporate P&L nor in the startup ecosystem.

Wayra, until then, had invested in hundreds of teams globally, yet there were internal questions regarding what the hell they were doing and how they impact the core of the business. This was especially concerning when headcount and budget challenges became topics on the board’s agenda rather than Horizon 3 innovations to create new capabilities taking advantage of or responding to disruptive opportunities.

How can corporate accelerators succeed in an ever-growing bubble, find the best teams, startups and deals to create a countable added value for the industry?

The answer can only be to rewrite the rules of the game by focusing on the basic principles of pragmatism, aside from all the hype and buzzwords. Let’s take another look at the basic scenario:

Startups are inherently good at exploration — exploring new opportunities

But weak at execution because they lack the means to scale and gain traction in the market. Startups need corporations as customers to gain traction in the market and gradually scale. Since startups do not necessarily speak the language of the corporates and the processes are very complex there, they rarely achieve this by their own efforts.

By contrast, large companies are good at execution. 

Because they already have traction strengths, including processes, customers, networks, resources, brand awareness etc. On the other hand, their optimized core business with a lower risk profile makes them weak in the “exploration” of new opportunities. Established companies, therefore, need, above all, innovations with added value, which fit in with the core business and contribute to the consolidated result. This can succeed with new solutions for internal efficiency gains or new offers for higher sales.

We should not be competing directly with universities.

In a market where there is more money waiting to be invested — just as before the .com bubble burst — startups do not come to us for the cash. Instead, startups can get support from the best universities and government agencies to secure their first 100k to 200k. Universities near institutions provide early coaching and education on how to create a startup. The teams come to us to do business with our mother company without logging countless meetings with company representatives.

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Written by
Christian Lindener
Written by
Christian Lindener

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