Why Do Corporations Run Startup Accelerators?
For large corporations, running a startup accelerator keeps their culture fresh.
It’s easy to see why young and aspiring entrepreneurs like startup accelerators, but if you step back and think about it, you have to wonder: what’s in it for the corporations? Accelerators are not investors. For example, Microsoft’s accelerator program doesn’t take any equity in the startups it supports, meaning that it’s essentially free. What’s in it for them?
While accelerators can be used to spot quality companies while they’re still small enough to invest in, that’s not what corporations like Microsoft have in mind when they create the programs. The bigger reason is to stay ahead of the curve.
Big tech companies all got to where they are by being innovative; the worst thing that can happen to them is losing that innovative spark. Unfortunately, it’s all too easy for this to happen if the company grows and the culture becomes complacent.
Startup accelerators are one way for the company to get in touch with what’s hot in the independent scene. It gets the company close to startups, which is no doubt good for recruiting. It also makes them see what the latest ideas in tech are, to make sure their own teams aren’t falling behind. There’s no better way to prepare for competition than to spot it before it takes off.
In a way, this technique is even better for innovation than investment. Acquiring a potential competitor can be worthwhile for bringing new technology on board, especially if the talent comes with it, but there’s no guarantee that the innovation will spread to the rest of the company. With accelerators, the host is forced into an intimate and hands-on relationship with the startups. It’s about more than just sitting on a board and monitoring progress. The more time corporations like Microsoft spend working with startups, the more they learn from one another.
To top it all off, working with startups is a great way for a company to show off its own products. It’s a free sales boost. If the corporation produces any B2B tools, they can be provided to the startups in the accelerator program. The company can give classes and tutorials to help members make the most of their software.
Essentially, you can view corporate-run startup accelerators as both a sales and a networking opportunity, with the added bonus of it having a positive infectious effect on the company culture. They’re the best way to earn goodwill and forge closer bonds with the startup scene, and that’s guaranteed to pay dividends down the line in the form of sales and recruiting. Keeping your finger on the industry’s pulse is the only way to make sure that you won’t fall behind.