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7 Mistakes Corporate Accelerators Make

As stated in an earlier post, more and more big corporations are becoming interested in startups and some of them believe that creating their own accelerator is the best way to interact with them. And in more than a way, they’re right! As most startup accelerators are accepting many types of projects, the probability for a big corporation to find a startup with whom they want to partner is usually close to zero.

So opening their own accelerator and advertising their own challenges to attract startups working on these challenges seemed the best thing to do for big corporations. Unfortunately, it appears that some corporate accelerators that opened recently are struggling to attract the best startups and it is, usually, due to the same mistakes. I tried to put together a list of the most frequent mistakes I saw made by corporate accelerators, based on my own experience in the Paris startup ecosystem but also my interactions with accelerators in other countries. Of course, it doesn’t mean that “classic” startup accelerators do not make mistakes, so to my corporate friends, promise, next post is on the startup accelerators mistakes ;)

  1. The unused 200m2 in your office is not an accelerator. This is the most common mistake. You realize that you need to get closer to startups, you have spare space in your office, startups need offices, et voilà! Unfortunately, while this might has been true in the 2000’s, it is not anymore. Startups need much more than space and, moreover, if your office is located far away from where the action is going on (city center for Paris), no quality startup will show up.
  2. Your brand is not enough to attract the best startups, even if you have a very powerful brand. In Paris alone, I already lost count of the number of accelerators, incubators and contests for startups. Entrepreneurs have now the power to choose and they will choose the best for them. That’s why the competition to attract the best startups is getting tougher and you need to do way more than good PR. Get out of the building and find startups where they are.
  3. Your colleagues are not credible coaches/mentors, and even if it’s true no one from outside will believe it. Big corporations are seen as sloppy, inefficient and disconnected from the entrepreneurial world and you need to compensate that vision. You can, for example, involve outside entrepreneurs (whom you know and/or work with) or involve your colleagues that have been entrepreneurs previously. In both cases, advertise it!
  4. “Lean design thinking” consultants are not mentors, they’re usually the contrary. Methodologies are great, canvas are very important but entrepreneurs always end up doing what they want and they’re always on the rush. Instead of bringing in consultants with no real-life entrepreneurial experience, even if it’s to talk about the same subject, invite entrepreneurs that have real-life stories to illustrate the points you want to make.
  5. Startups don’t manage innovation the way you do. They’re unstructured, (very) fast-paced and, most certainly, they will pivot once or twice during the program. And it’s normal! Don’t try to teach them about release cycles, test strategies or this new agile development methodology. It works well for known products with known features but poorly for startups that are developing unknown features for unknown customers.
  6. Accelerators are not PR, and if you consider it like that, most certainly you won’t exist in 2 years. Accelerators, like most organization (for or not-for profit), need to have a business model. While most of us out there are still struggling to find sustainable business models, you should as well. Otherwise, your line of budget will be the first to disappear at the next finance meeting and it will definitively alienate your chances of really succeeding at partnering with startups and getting innovation outside-in.
  7. Money talks! Like really, it does. The absolute number one reason why an entrepreneur will select an accelerator is the amount of money they can get from it. Then, it’s about program recognition, mentors’ credibility, etc. So, why do you keep not investing money in the startups you accelerate?? Big corporations are seen from the outside as very rich (people don’t care about your budget problems), so when you decide to not invest (or worse, coaching for equity), it’s almost a no brainer for the best startups who will go to another program.

I have most certainly missed other mistakes that corporate accelerators do. If it’s the case, don’t hesitate to reach out to me directly on twitter and I will update the post accordingly ;)

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The Corporate-Startup Partnership Maturity Curve

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Since I started to be involved in the startup ecosystem, I have been extremely interested by involving large corporations with startups. Initially, my view was that large corporations had a lot to learn from startups as much in terms of innovation as in terms of energy. On the other hand, startups had also a lot to learn from bigger corporations: being focused on customer and revenue among other things. That’s why my acceleration program, StartUp42, was and is still mainly funded by large corporations.

Since I launched StartUp42 two years ago, it seems that more and more large corporations have discovered (again?) that startups were sexy and that they needed to get closer to them. But, as in any relationships, there’s also a maturity curve for the corporate-startup partnership.

Corporate-startup partnership maturity curve

The figure above is the result of my direct experience involving large corporations with startups, hearing about other programs and a discussion I had last month with someone from Accenture Open Innovation group. I believe that large corporations go through 3 different phases in their attempt to partner with startups: “Amused”, “Worried” and “Welcoming”. Of course, this pattern does not apply to all corporates and not all of them go through the 3 phases in that order but most experiences I gathered tend to confirm it.

The first phase is the “amused” phase. High-level executives, usually HR director or Marketing directors, discover the growing interest for startups. And they’re right! What’s not to like in startups? They’re young companies, founded by equally young talented individuals with big dreams and lots of energy. In that phase, corporates usually tend to sponsor or organize events like startup weekends or hackathons. The main objectives are to increase their brand’s reach to a younger audience, potentially notice young talents to recruit and ideally get wowed by one of the teams’ product.

The second phase is the “worried” phase. Now it’s the C-suite’s turn to notice startups and usually it’s either because they realize that they have troubles coping with innovation cycles or, “worst”, they’re already being disrupted. In that phase, corporates tend to follow the saying “keep your friends close and your ennemies closer”. Instead of partnering with the startups, they prefer to watch them carefully by investing in them or by hosting them in their own acceleration/incubation program.

The third and last phase is the “welcoming” phase. Leaders in that phase understand that the size of their organizations slows down their capacity to innovate and they’re better off integrating startups’ innovations in their portfolio through partnership or M&A.

So far, I’ve seen very few organizations capable of being in the 3rd phase (think Google, Facebook, Cisco). The reason is not because they’re necessarily evil agains startups or because of incompetence but mainly because it demands a commitment of the organization at every level to be able to work with or integrate startups. Entrepreneurs react almost opposite to corporate executives and it demands a lot of work from both sides. But anyway, as in any relationships, they don’t really have a choice. In the end most startups will need to work with big corporations (or get acquired) and most big corporations will need to work with startups. We’ll need to make it work ☺