RocketSpace formally launched its first corporate accelerator program a little over a year ago. We aimed to create a new model that brings corporations and startups together to fuel industry-focused transformation while achieving real, measurable results. We wanted to build something different than the more than 500 existing accelerator programs in the United States (about 20 percent of those are privately-funded; most of the rest are run by educational institutions or government-backed agencies).
Our research showed that, in many cases, a disproportionate focus in traditional accelerator programs is placed on receiving PR for the corporation and participating startups, with little accountability for ROI. Although accelerators are celebrated in the press, there's a monumental difference between true innovation and the perception of innovation. Too often, the perception is the focus. Accelerators become something of a PR or marketing ploy, and “success" is measured in media impressions rather than in value added for participating parties.
“We invested $250,000 in this accelerator program and received $6 million in earned media impressions! That's fantastic!" a chief communications officer might say of a traditional accelerator program. There's one major flaw in that thinking: the purpose of accelerators should be creating innovation, not impressions. Otherwise, it's a disservice to both the startups and the corporation.
Innovation shouldn't be an added bonus in accelerator programs; it should be the cost of entry. If your company is considering testing the waters of an accelerator program, here are a few considerations for deriving maximum value:
1. Throw Everything You've Heard About Accelerators out the Window
If you Google “Startup Accelerators," you'll get more than half a million results. Thousands of articles debate their merits, while many offer mixed results on their effectiveness. The main problem? "Success" is often loosely defined and usually includes whether or not a startup earns a bigger investment at the end of the program or is still operational after a given number of years. As I mentioned above, the first step in getting true value is focusing on the right things.
2. Define Your Objectives
For many high-performing corporations, the main goal of an accelerator is to create a continuous stream of commercially-viable products from participating companies. For others, it's to forge relationships with emerging companies that have the potential to disrupt a category in the years ahead. There is no one “right" answer or one-size-fits-all solution. At RocketSpace we recommend defining your objectives and actionable key metrics up front including scoping, timelines, quantifiable outcomes, etc. This helps setup the program and pilot testing for success.
3. Design a Program Around Your Objectives
Once your objectives are clear, the parameters for the accelerator program can be designed. Every decision should be filtered through the lens of your objective. What is it that your corporation is looking for? This may include a problem/solution approach, or a scouting process for finding the right partners that can help accelerate your company's technology roadmap. To provide some context on timing, at RocketSpace we spend about two months defining program strategy and objectives for each of our accelerator programs. Only then do we begin recruiting startups to participate.
4. Eliminate Unnecessary Obstacles
If you want to design a great accelerator, think like a startup. That is, don't do anything simply because “that's how it's always done." Start from the ground up, and remove any unnecessary obstacles that don't align with your objectives.
For example, if you want to attract top-quality Series A-round startups, forego the typical accelerator equity requirement. Although a small equity stake is a requirement in many accelerators, it often isn't strategic for several reasons.
First, it will deter many high-growth-potential startups. Beyond not wanting to part with equity right away, sharp founders will be hesitant to permanently align with a brand (by giving up an ownership share) before making sure it's a perfect fit. It's like test driving a car before buying: you need to do it first to be sure. Plus, modern startups are hesitant to partner with individual brands due to “signaling" risks—which is another reason why the RocketSpace model is so appealing.
Besides, it's not strategic for companies to have small stakes in lots of companies. Let's say a company runs an annual accelerator for five years with eight startups in each cohort. At the end of the five years, there are 40 startups that the company must manage its interests in! This kind of “spreading it around" mentality is not only unlikely to pay off in any meaningful way, but it also creates a long-term-commitment conundrum for the corporation.
Another unnecessary obstacle can be location. For Series A round startups, moving a group of six to ten employees for 12 weeks is often out of the question. With a virtual accelerator program, you create an opportunity to scout from a larger universe of applicants, including those who may be doing big things outside of San Francisco, New York City, or your corporation's home city.
5. Ensure Everyone Is Committed to the Program Internally
Sponsoring or running an accelerator doesn't start and stop with writing a check. It takes serious buy-in from the top down across multiple departments. For example, if your R&D team isn't interested in adding new ideas to the pipeline, then an innovation-based accelerator won't work. Department heads must all be aligned around the program's objectives and willing to commit time to ensure the program is a success. That goes beyond obligatory mentoring sessions and reviewing executive summaries. Much like anything else, input will determine output.
While every program is different, a key factor for success is having a project manager willing to dedicate a percentage of his or her time during the strategy phase as well as during the program. To ensure that their company can get the most out of the program, the PM should also have a direct line to executive strategy and internal business units.
6. Evaluate Results and Set Next Steps
During and after each accelerator cohort, results should be evaluated against the objectives. In RocketSpace accelerator programs, we begin our pilot phase in the fifth week. By week 12, we have actionable data—and sometimes go-to-market software and hardware—that can be evaluated.
At the end of each cohort, it's important for the corporation to assess its future with each startup. Some may not be a match long-term, and that's okay! That's also why requiring equity upfront is a bad idea. For startups that are a good match, there are many paths forward. It may involve an equity investment from the corporation, licensing, and/or M&A, but more often the right balance is a partnership in which the corporation is a customer of the startup.
BONUS! It's Not Too Late for Great PR, If That's What You're Looking For
Just because PR shouldn't be the objective of an accelerator program doesn't mean it's a bad thing. At the end of a successful program, there will be ample opportunities to generate earned media. However, instead of a tired headline like “Corporation Runs Accelerator to Help Startups," your media relations team will be armed with measured, proven results to tout the program's benefits. Headlines like “Innovative Accelerator Program Leads to Development of New Software" or “Corporation Forges Long-Term Partnership With Emerging AI Developer After Successful Two-Month Pilot" will be icing on the cake.
Interested in how industry specific accelerators can deliver innovation value in fields like Retail, Insurance, Telecom, Healthcare and more? Learn more about our Industry Accelerator Programs that enable startups and corporates to come together to fuel industry focused transformation and achieve measurable results.
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