By Edmund Gee:
Accelerators come in many shapes and flavors. Most provide guidance and resources to help entrepreneurs get their businesses off the ground faster. Some are independent, such as Y-Combinator, 500 Startups, Angel pad, and DreamiT among many more. Others are corporate sponsored accelerators from large companies such as Citrix, Disney, Nike, Cisco, Microsoft, Pearson, Samsung and SKT Telecom . I won’t go into the benefits of the independents, as this subject is well addressed in the current blog-o-sphere. For the corporate sponsored programs, if the right one is chosen, it could be exceptionally advantages for all parties.
When we usually think of corporate sponsorship, we imagine heavy handed corporate agendas throttling the future prospects of an entrepreneur. We have heard many cases of David versus Goliath, where the corporate sponsor negotiates egregious terms and the startup becomes an R&D extension for that corporate sponsor. I have heard these nightmares stories, and yes, they do exist.
However, corporate sponsors can add great value to the startup. Many corporate sponsors offer a number of valuable resources that can really help the startup advance its business and product development. Some of the valuable resources include access to development tools, technical expertise, market assessment, and professional services such as legal and finance. The technical and market assessment is one of the most valuable in-kind services. Entrepreneurs are bright people, and for the most part, understand their markets well. However, it is different getting a company started than working in a business unit within a market leading company that has several thousand “feet on the street” gathering live input from the marketplace. Customer and market information is invaluable as it determines what features need to be incorporated into the product. Startups with their limited resources have little leeway in terms of identifying the initial target market and which features to include and, just as importantly, which features to exclude. Choosing wrongly can be a death sentence for the startup.
The critical factor in choosing a corporate sponsor is proper alignment of the corporate sponsor’s strategy and the business direction of the startup. Creating a relationship where the objectives of both parties align in a meaningful way is ideal. The reason this match works is based on two fundamental tenets: 1.) Large corporation move slow and are not good at cultivating innovation internally and 2.) Quick and nimble startups, on the other hand, are good at executing on innovation. Startups are free of the bureaucracy associated with a large organization. Once the correct alignment between a startup and corporate sponsor is achieved, together they can deliver very compelling results. One of the best scenarios is where the corporate sponsor becomes a referenceable customer or gets access to innovative IP. In parallel, the startup builds a robust standalone company. This is good for everyone involved, the corporate sponsor gets access to new technologies and the startup gets a qualified customer to build strong investment base for Series A funding. Additionally, the corporate sponsor may provide a welcome exit for the startup’s founders and investors.
Bottom line, Joining a corporate accelerator does not have to be a one-sided, winner takes all situation. Entrepreneurs should pick and chose the corporate sponsor that realizes the startup’s value and helps with execution and growth. Remember there are benefits to working with the giants.