Buying a Startup or an Accelerator: What is better?

Forms of collaboration between startups and corporates that want to innovate.

Today, a lot of corporations strive to engage with startups to spur innovative development. The choice of the form of collaboration depends on whether a corporate wants to save or make money, change its corporate culture or expedite the launch of new products.

Creation of an incubator or an accelerator.

This is one of the most popular tools for the development of corporate innovations, albeit not the most effective one. An accelerator provides startups with a work site along with various kinds of assistance such as access to technologies and marketing channels, legal advice, networking and marketing assistance, and sometimes initial investment or funding upon competition of the acceleration programme. In Western countries, acceleration programmes are often organized in partnership with a successful accelerator, as exemplified by the partnership of TechStarts with Google, Microsoft, IBM and American Airlines.

I would recommend creating a corporate accelerator only to those companies that are flexible enough to launch it in the three months after coming up with the idea. Even if the acceleration is successful, the future of the startups that intensify their collaboration with a corporate over time remains unknown. Until the corporate learns to be flexible, quick and innovative, it will keep slowing down all startups that wish to engage with it.

Creation of an internal accelerator with the involvement of your employees.

This is the cheapest method of all. Your employees know business processes and the needs of your company. The biggest risk is that their entrepreneurial initiative becomes so suppressed under the influence of corporate culture that they lose their ability to come up with innovations solutions.

One should think about an internal accelerator if the company’s management sees some unfulfilled innovative potential in its employees and shares a positive attitude towards entrepreneurship initiated from within the company. It should be noted, however, that in complex fields that require specific knowledge and competence, an internal accelerator is almost the only way to nurture innovation. This is because no one except for your employees might have the necessary expertise.

Startup acquisitions.

Corporations can acquire startups for their product lines, technologies or business. But often the main reason for buying a startup lies in the fact that a corporate cannot attract experienced personnel itself, which is why its only option is to buy the entire startup on the condition that its team will proceeded to work for the corporation. In this case the actual products of the startup or its business are of no interest to the corporate company, which is forced to overpay and buy something that it doesn’t need.

However, I would advice all corporations embarking on the task of developing an innovation strategy to buy startups despite their goals, stage of business development or vision of the future of the newly acquired asset. Until the corporates start acquiring startups, they will not be able to learn how to do this. Until the company learns how to buy startups, it will not be able to learn how to integrate them into its business. Until the company learns how to integrate and select the best and the most useful, it will not be able to find an optimal way to accelerate innovation. In corporate innovation, just as in entrepreneurship, the most important is to fail and learn as quickly as possible.