These days you don’t have to be a small, agile startup to generate new ideas. Large, more mature companies can—and in my opinion, must—make innovation a priority to remain competitive.
So it’s not surprising that a growing number of Fortune 500 companies have done just that. Companies such as Google and Coca-Cola have incorporated research labs and other entities to further spur innovation. One of the ways companies accomplish this is through corporate business accelerators—programs that provide early-stage companies with mentoring, capital, and access to investors in return for an equity investment.
But business accelerators aren’t innovation machines that run on autopilot. In fact, 60 percent of corporate business accelerators fail after two years. To find success—for themselves and their startups–corporations must approach their accelerator programs with strategy and purpose. Here are a few strategies that can help.
What is a Corporate Business Accelerator?
For senior executives, launching a corporate business accelerator can be a form of business risk management. Large, slower-moving companies face the risk of falling behind a growing number of competitors—including agile, disruptive startups—and accelerators are a way to leap ahead. Working with startups is a great way to do it.
To remain competitive, savvy executives are looking at new ways to bring creativity and speed into the traditional corporate ecosystem.
Corporate venture funding hit an all-time high of $73.1 billion across 3,359 deals in 2020, according to CB Insights. Corporate accelerators are one way to invest in startups. The first one launched just over a decade ago in 2010, but now there are hundreds of corporate business accelerators around the world.
Startup founders often choose to enter accelerator programs because they provide access to resources that would be unavailable otherwise. It’s a matter of survival; 37 percent of failed startups say running out of capital was to blame. Corporations reap rewards from accelerator programs, too. Corporate executives can select projects to extend and amplify their products and services. In addition, firms can form new entities in their image and have an investment in the future.
Engaging the Local Startup Community
Most cities have some sort of startup community at this point. You can find them at meet-up activities, pitch competitions, conferences, and an array of other events. Corporates that engage with those founders can identify local and highly skilled talent. In addition, corporates may find ways to take advantage of complementary strengths and goals. I’ve seen this in banking, as large, established financial services companies bring resources and scale to their pairings with agile fintech startups.
In 2015, Bank of the West launched a corporate accelerator alongside an innovation studio that is designed to match our businesses with fintech companies to develop prototypes and test products directly with customers. Many of the startups we engage with are local.
Finding the Right Innovation Partner
“Innovation doesn’t come just from giving people incentives,” science author Steven Johnson once observed. “It comes from creating environments where their ideas can connect.”
“Innovation doesn’t come just from giving people incentives; it comes from creating environments where their ideas can connect.”
Selecting a firm with a strong track record of identifying the latest innovative technology and digital trends can create an environment like the one Johnson mentions.
Other ways to embrace innovation include:
- Adopting proof-of-concept pilots
- Hosting employee-learning and crowdsourcing events
- Creating dedicated innovation teams throughout your organization.
Most corporations are set up, structured, and designed to maximize profit and minimize risk. This is especially true for the regulated financial services industry. But to become the disruptor, as opposed to the disrupted, it helps to be willing to take measured risks. By strategically partnering with and investing in like-minded startups, corporations can reap the reward of innovation.