Pattern for building a successful corporate accelerator

11th Jan 2018
  • +0
Share on
close
  • +0
Share on
close
Share on
close

Numerous corporations can feel the weight of innovation and in order to face the risk of disruption, they need to make sure that they keep up with the pace of the growing market, which is where corporate accelerators come in. 

With technological innovations continuously changing industries, we have seen startups and businesses shut down before they can even think of pivoting.

Accelerators vs corporate accelerators

Accelerators get startups off the ground and support their journeys with mentoring, office space, knowledge, and other resources, thereby prompting speedier growth in ventures.

For firms, an accelerator is a new edifice, acting as a valuable business building tool that is quick paced and spry, like an experimental playground for innovation. Inside this new structure, companies can set up new standards to create an environment where ideas can prosper and grow, shielded from corporate hierarchical structures and processes. An accelerator also aims to generate economic benefits with components to improve the probability of success. The economic benefit is accomplished by financial returns on investments.

Considering these benefits, organisations set up accelerators to progress sequentially. Be that as it may, not all accelerators are geared towards economic benefit, which is one reason for failure. In any comprehensive firm, there is a culture of profitability and if the accelerator does not seek after this ethos, it will fail to survive in the market.

The corporate accelerator model

Even though the original accelerator model was formed as an investment tool, it was never the primary reason for corporates to finance incubation programmes. An accelerator is a strategic choice that permits enormous corporates to remain relevant and focused, especially in our quickly evolving economy. It helps build a growth-hacking strategy, encouraging corporates to gain exposure to startups and connecting them to remain close to innovation, which is critical for a business climate starving for growth.

The corporate accelerator can drive economic benefits if either of these models is applied:

Financial returns: Economic benefits by accomplishing financial returns on equity investment in startups.

Innovation integration: Economic benefits by coordinating inventive innovations or plans of action in an association.

Establishing either of the accelerator models inside an association requires precise strategic direction and characterised objectives, helping the accelerator be economically practical and manageable inside an association.

There are some essential queries that need to be answered before setting up an accelerator:

  • Is there leadership commitment to building an exponential business?
  • Is there a commitment to scale businesses on the edge with the goal that they can move towards becoming one solid core?

The financial returns model

In this model, the firm should make sure that the tools for early-stage growth and significant financial outcomes are accomplished within 5–7 years. If accelerators were to grow to increase twofold of this outcome , a 2–4-year period will be needed. Odds are high that most of them will be able to fold with time.

Your selection process should define:

  • Will this startup be able to exit or be integrated within the next 5–7 years?
  • Does it have the potential to give a 5x–10x exit?
  • Do they have the prototype and first traction in the market?
  • Is the team open to criticism and prepared to pivot if necessary?
  • Do they have a system of specialists that can help the startup in their specific vertical?

Deal

  • Money for equity
  • Resources for equity
  • Convertible loan

The innovation integration model

Here, the association perceives the need to look outside of its core business and search for opportunities on the edge. Additionally, the association can adjust to a culture which is interested in innovation and can give the dexterity and speed required for growth. The economic benefit is then taken from the impact of integrated technology or business model of action for the association.

Your selection process should define:

  • Is this business representing an edge?
  • Is the market moving such that this innovation may soon be a part of it?
  • Do we have the specific resources to enable the startup to additionally develop the technology?
  • Is the founding team responsive to criticism and prepared to pivot if required?

Deal

  • Warrant
  • Money for equity
  • Resources for equity
  • Non-equity deal, with an option to invest after the programme ends

To infer

The strategic aim of any accelerator must be to push the limits of the present market, knowing that those approaching these programmes unprepared are sure to fizzle.

The long-term strategy, physical environment, expanded flexibility, and a sense of intrapreneurship empowers both corporate brands and startups to cooperate and challenge current solutions to develop new methodologies. The main takeaway from this is to be smart enough in handling these key components which are required to put together a solid accelerator programme and thus thrive.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

  • Facebook Icon
  • Twitter Icon
  • LinkedIn Icon
  • WhatsApp Icon
  • Facebook Icon
  • Twitter Icon
  • LinkedIn Icon
  • WhatsApp Icon
  • Share on
    close
    Report an issue
    Authors

    Related Tags