About the authors: Vignesh Balagopalakrishnan is a Management Consultant at Zinnov who works with the Engineering Excellence team. Iris Babu is a content writer.
India undeniably has a vibrant startup ecosystem, with Zinnov and NASSCOM pegging the number of technology driven product/digital startups in the country at over 4,200 in 2015, trailing behind only the US and neck-to-neck with UK. Startup accelerators have been a critical part of the ecosystem providing valuable resources and mentorship to help startups mature. One of the earliest startup accelerators in India was Microsoft Ventures established around 2012, a model now replicated by the tech giant globally.
Today, India is home to over 40+ accelerators, with about 1/3rd of them being corporate accelerators. Some of these include Microsoft Ventures (Bangalore), Target (Bangalore), Reliance (Mumbai), PayPal StartTank(Chennai), Pitney Bowes (NCR) to name a few. In the past few months, there has seen a surge in the number of corporate startup accelerators being set up in India. In 2016 alone, several large corporations have announced/set up accelerators in India: Apple, Oracle, Airbus, Lowes, Tesco, SwissRe to name a few. Why are we suddenly seeing this new trend?
The average lifespan of a company on the S&P 500 has decreased from 90 years in 1935 to 18 years today. For several organizations, growing in size and becoming process-heavy has resulted in an innovation bottleneck that needs to be addressed. Innovation has become cornerstone for organizations of tomorrow, with the landscape evolving into a disrupt-or-be-disrupted mode. With large corporations acknowledging this trend and bolstering themselves for the future by investing in innovation, startup accelerators are emerging as the most preferred engagement model to work with startups across India. The appeal of the model primarily lies in the fact that it’s a win-win situation: startups get an opportunity to gain strong footing with no interference while large companies achieve their corporate objectives, a model being dubbed as “co-opetition” (collaboration + competition).
Corporate Accelerators – What’s the value for large corporations?
Different accelerators are aligned with different organizational priorities. Here are the most common drivers for setting up corporate accelerators:
- Promotion of own technologies – Promote own technologies/platforms by offering them to startups at no or subsidized costs (Ex.: Microsoft accelerator was initially launched to promote adoption of Microsoft Azure)
- Complementary products – Develop complementary products/services that can add value to the organization’s existing offerings (Ex.: Apple is looking to strengthen the iOS developer ecosystem through the proposed India accelerator)
- Access to external (disruptive) innovation – Access to and incubation of next generation technologies and products aligned with organization’s future priorities
- Joint Go-to-market solutions – Enable access to newer markets through joint GTM solutions or eventually M&A. (Ex.: Target has signed vendor agreements with startups like Konotor & MuHive that graduated from Accelerator Program)
- Exposure to employees – Promoting intrapreneurship and a culture of innovation within organization (Ex.: Airbus BizLab Bangalore has three internal Airbus teams as part of the current cohort)
- Branding and Talent Sourcing – Building a strong employer brand as an innovation-focused company and thereby attracting quality talent
Accelerators have become a valuable component of the startup ecosystem in the country today. While startups are gaining significant value from these accelerators, large corporations setting up accelerators need to be cognizant of their intended outcomes from the accelerator, design and operate them effectively to derive significant value from them. Target’s vendor agreements with its accelerator alums Konotor & Muhive, and Microsoft’s investments in its alums like Ranku are clear instances where companies have realized value from their accelerator programs. If done right, these programs can evolve into an inevitable tool for large corporations to stay ahead of the curve.
