Corporates are increasingly active in the UK Accelerator space with 51% of all Accelerators having corporate funding and 65% of new Accelerators in 2016 having corporate funding.
This is according to Business Incubators & Accelerators: the National Picture published by the UK Government’s Department for Business, Energy & Industrial Strategy (full report here).
The report paints a picture of the growth and focus by sector & region of Incubators & Accelerators across the UK. One highlight is the growing influence of corporates as they invest in Accelerators (but not Incubators), either funding or co-funding an existing Accelerator or creating their own. It’s worth noting that this comes at a time when many corporates are reducing internal R&D and seeking to ‘externalise’ Innovation, reducing costs & risk, at least in theory so the two trends may be connected.
Examples from the report are are Capital One (credit card provider) with its Fintech-focused Growth Labs, John Lewis & Waitrose (retail) and their JLAB and Cisco, who support several Accelerators such as the IoT-focused Startupbootcamp.
The report identifies the rise of corporates as one of 4 major trends uncovered by the research but for me this is the most interesting and my focus in this piece.
The trend raises several questions:
1. Why are corporates investing in UK Accelerators, and is it good for them? The report highlights 4 reasons from prior research:
- Rejuvenating corporate culture to create an entrepreneurial mindset among employees
- Creating an innovative brand that attracts customers, business partners and future employees
- Solving business problems quicker and at lower risk
- Expanding into future markets by accessing new capabilities or channels
Whilst I wouldn’t disagree with these it’s certainly not clear if corporates are delivering on these aims and hard evidence will always be difficult to obtain, both for purpose and success. Anecdotally, many seem to be more successful at creating an external image of innovation through these investments than they are in spurring corporate innovation. This would make it an example of what Anand Sanwal of CB Insights calls “innovation theatre” – more show than substance and number 6 of 8 on his list of what corporates do rather than innovate! We need more research to assess success, both from the corporate and start-up perspectives and one future source of this may be the Innovation Growth Lab, a much needed initiative to bring missing data to the innovation debate.
2. Is it good for UK start-ups?
The report doesn’t address this. Our take is that it can be for a sub-set of start-up’s that are focused on a specific sector, or are willing to focus on a specific sector. This is especially true for start-up’s in healthcare, life science and other ‘deep tech’ sectors where there is a natural fit, but maybe less so for more generic or digital start-up’s with no implicit sector focus. In the latter case, getting too close to a particular corporate could be seen as negative and limit other partnership options. Working with corporates has always been a tough challenge for start-ups given the gulf in culture so one would hope that this is easier with a corporate-backed Accelerator but their is little evidence to demonstrate this. Only those corporates that are fully integrate the accelerator into their business are likely to offer an easier path to collaboration and partnership. If a stand alone initiate, it is not likely to be any easier than before.
3. Is it good for UK innovation in general?
In a post Brexit UK the calls for more innovation are very loud, a major strand of a revitalised economy. Is the increased presence of corporates in Accelerators spurring and focusing innovation, or is it slowing and constraining it? Corporates have their own needs, cultures and time-frames mostly incompatible and ess radical than those of start-ups. Corporates may be filling a gap increasingly vacated by VC’s in the innovation eco-system but unlike VC’s, their objectives are not purely financial, as the above list suggests. They are reaching deeper into the innovation eco-system than before, co-opting start-up’s with ideas that address their problems or opportunities; surely this must have some impact on the overall eco-system, the type of start-up’s, their focus and success? Even if it does accelerate short-term innovation it may limit the emergence of more radical innovations not in their interest to pursue and an entrenchment of existing players at the expense of future disruptor
The jury is still out but we suspect that much of this rise in corporate Acceleration in the UK is similar to the rise in Corporate Venturing (CVC’s). Both signal are a clear shift in corporate policy, ‘externalising’ innovation, though the motivations may too often be about image & playing at being a VC, rather than a serious attempt to accelerate corporate innovation.
Too many initiatives are isolated from the rest of the business or purely financially-driven. The danger is that corporates will not get the heightened results they expect and deem them a failure. The reality is they need to integrate these investments into a cohesive Innovation Strategy, one that enables strategic business goals and leverages all the assets of their organisation, including other innovation initiatives.
Report summary and download from NESTA , including research data set as an Excel file and discussion on the report.
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