Your Primer for Startup Acceleration

Startup acceleration has been getting a lot of buzz lately in the realm of strategic innovation. Startup accelerators are emerging as almost commonplace with larger companies, and are used to foster innovation, support new, blossoming ideas, and build mutually beneficial relationships with those external entities that promise to bring new disruptive capabilities to market. Companies that cannot set up their own accelerators have access to a number of third-party Accelerators-as-a-Service.

Startup acceleration, which differs from startup incubation, is designed to be a short sprint, allowing companies to select a few candidates based on specific needs or domain expertise, and provide the selected startup candidates with resources and time (typically 3-6 months) to develop a proof-of-concept, or pitch, resulting in either a go or no-go decision. Startups that are selected through the acceleration process may either be incubated (typically 1-5 years using various forms of funding), be provided grants, or even acquired.

Here are some important steps to consider when setting up and running a startup accelerator for your company:

1. Establishing Strategic Purpose and Goals

• Define Objectives: Companies decide on the strategic goals for the accelerator, such as:
• • Exploring or testing new, potentially disruptive technologies or markets.
  • Solving industry-specific or product-specific challenges.
  • Building an ecosystem for future partnerships, acquisitions, or investments.
  • Enhancing brand image as an innovator.

• Focus Areas: Corporations often focus on industries or technologies that align with their core business. However, startups are also accelerated because the solution lies outside of the company’s core competencies. Universities may conduct accelerators to identify startups that can help commercialize or take their new IP to the next level.

2. Determining the Program Structure
   • Duration: Programs typically run for 3 to 12 months.
   • Cohort-Based: Startups are grouped into cohorts, with each cycle targeting a set number of selected participants.
   • Support Model: The program offers mentorship, resources, and funding.

3. Defining the Selection Process
   • Applications: Startups apply through a competitive process, showcasing their business models and potential. Typically, startups have to be less than 5 years old and have commercial revenue of under $1 million, but this may vary depending on the need.
   • Evaluation Criteria: Startups are evaluated on innovation, market fit, scalability, product or technology maturity and alignment with the corporate or program goals.
   • Selection Panel: A panel of corporate executives, investors, and industry experts may be used to select the finalists.

4. Providing Resources and Benefits
   • Funding: Startups may, in some instances, receive seed funding, either as equity investment or grants.
   • Mentorship: Access to industry experts, corporate executives, and successful entrepreneurs is provided.
   • Office Space: Many accelerators offer co-working spaces.
   • Corporate Resources: Access to R&D facilities, technical infrastructure, or market data may be provided.

5. Planning the Program Segments and Activities
   • Workshops and Training: Sessions on product development, marketing, fundraising, and scaling.
   • Networking Sessions: Introductions to potential investors, customers, and partners.
   • Feedback Loops: Regular check-ins and pitch rehearsals to refine strategies.
   • Pitch Day: A culminating event where startups pitch to investors, partners, and corporate leaders.

6. Setting Up the Team and Communications
   • Core Team: A core team manages day-to-day operations, including program managers, mentors, and industry advisors.
   • Partnerships: Corporations often collaborate with external accelerators, venture capital firms, or universities.
   • Technology Platforms: Platforms can be used to automate workflows, track progress, communicate, and manage logistics. Ideation portals are sometimes used, which can be organized by teams or communities.

7. Determining the Right Metrics
   • Startup Growth: Revenue, customer acquisition, or product milestones achieved during the program.
   • Technology Advancement: Technology maturity is often measured to determine the extent to which a technology or capability advances during the acceleration process.
   • Corporate ROI: Impact on innovation goals, partnerships formed, intellectual property developed or commercial prospects or customers developed.
   • Alumni Success: Tracking startup success post-program to assess long-term impact.

8. Provision of Prizes, Funding and Equity
   • Prize Awards: Prizes are commonly awarded to startups achieving the most points throughout the acceleration process, or during specific segments.
   • Equity Model: Some accelerators take an equity stake (e.g., 5-10% or more) in exchange for funding and resources.
   • Grant Model: Grants offer resources without taking equity, focusing instead on long-term strategic relationships.
   • Partnership Opportunities: Provide collaboration opportunities with the corporation for pilot projects, joint ventures, or product integrations.

Some Examples of Corporate Accelerators

Some larger companies have established ongoing acceleration cycles throughout the year, which, in some cases, have been in place for several years, offering startups a chance to be the next Unicorn in the StartupVerse. Here are just a few examples:

• Google for Startups Accelerator: Focuses on tech-driven innovation 
• Microsoft ScaleUp: Provides access to Microsoft’s technology stack and network 
• Bosch Startup Harbour: Targets IoT and deep tech startups 

The past five years have shown a great expansion in startup acceleration, with nearly 75% of Fortune 500 corporations participating in some way – either through their own accelerators or through 3^rd party accelerator service providers. Beyond that, the concept of acceleration is just beginning to scratch the surface in the Global 2000 and mid-market segments. There remains a tremendous opportunity for companies yet to embrace startup acceleration as a strategic business practice.

By integrating startups into your corporate ecosystem, accelerators can drive innovation while allowing your company to benefit from the agility and creativity of emerging ventures. 

Set up a call with Ezassi to discuss your next steps in Startup Acceleration.