India’s corporate accelerator sector is positively booming, with startups playing an increasingly important role in the open innovation strategies of large firms, including the likes of Jio Gennext Microsoft and T-Labs. Non-existent till a few years ago, their influence today can be essential for the sustenance of the startup ecosystem in the country. While this indicates the growing importance that large organizations now place on their interactions with startups, the sharp upward trend in accelerator activity has prompted some to question their value.
A corporate accelerator is a specific form of seed accelerator which is sponsored by an established for-profit corporation. Similar to seed accelerators they support early-stage startup companies through mentorship and often capital and office space. In contrast to regular programs, though, corporate accelerators derive their objectives from the sponsoring organization. These objectives can include the wish to stay close to emerging trends or to establish a funnel for corporate venture capital investments.
More recently, corporate accelerators have faced criticism as they might be less effective as regular seed accelerators. For example, the startup could be too focused on solving the problems of the sponsoring firm rather than finding external customers. Corporate accelerators differ from Business incubators, which usually have a continuous intake, due to their fixed-term, cohort-based organization, similar to seed accelerators, and are distinct to corporate venture capital which is a direct, targeted investment. Having achieved varying degrees of success, the model has evolved, resulting in a variety of accelerator models, some industry specific, and some agnostic. This is good for new startups, as more and more corporates are looking at what works for them rather than taking a one size fits all approach. What does being part of a corporate accelerator mean for a startup? Will they be allowed to fulfil their true potential, or risk losing their uniqueness, as they become part of the corporate structure?
Autonomy for the startup really depends on the corporate and the purpose behind their accelerator programme: some companies are looking for start-ups that they can buy out, use as suppliers, or have them use their services. The latter option will allow startups more freedom because there isn’t a huge push from the corporates for them to grow in a specific direction, otherwise it may be more difficult for the startups to keep their uniqueness, because the corporate will be putting certain mechanisms in place to ensure the start-ups is fit for purpose.
For startups considering taking part in a corporate accelerator, it is important to be clear about the sector they are trying to target with their products and services, and to choose a programme based on the host company’s reputation in that sector. They should also look at the alumni of the previous accelerators ran by the organisations they are interested in. Most corporates are keen to promote the success of their programmes so it should be easy to find what the alumni went onto do and how that particular accelerator programme helped them achieve their goals. As accelerators have grown in popularity, so has the number of corporate accelerators as a way of funding these programmes. At the same time more corporates are starting to look at ways of innovating, and this becomes the first step.
Startups find it hard to work with corporate accelerators who haven’t got a product around which they would want them to work, which can leave all parties disillusioned. The real value that startups want is revenue through trials and access to audience through distribution, however most corporates do not structure to offer this. And while corporates are keen to be seen to be innovating, the result can be Proof of Concepts (POCs) being agreed, but stalling when the question of implementation and scaling comes up. Many see companies who have done amazing POC work but then, due to the risk associated with a supplier being a startup, there is a reluctance to scale the project internally. Nevertheless, corporate accelerators are seen as having a crucial role to play in bringing together early-stage entrepreneurs with market conditions to test assumptions and prototypes, and opening up opportunities to a wider audience.
