Brett Calhoun makes the case that in a time of no-code development & high quality online founder guidance available for free, the age of the general accelerator may be coming to an end — simply put, it’s hard for general accelerators to offer startup founders sufficient value for the equity cost. He might be right! On the other hand:
Corporate accelerators may be even more important now.
For startup founders, the value of working closely with the right corporate partner is evergreen, so corporate accelerators aren’t going anywhere. In fact, if as Calhoun argues, general accelerators are diminishing in importance, corporate accelerators might rise to fill the gap.
Scholars Yael Hochberg and Susan Cohen define an accelerator as a cohort-based, time-limited program for startup companies which delivers learning opportunities and relationships and culminates in a demo day; usually it comes with funds in exchange for equity. An accelerator is meant to be a path to growth — it gets a product or service into the hands of enough customers to demonstrate (or disprove) the value of the startup’s business. General and corporate accelerators share these patterns and intentions, but corporate accelerator practice is different from general accelerator practice in critical, material ways.
First, in a corporate accelerator, the parent firm is already the partner you want. Where a general accelerator might offer introductions to investors, business & legal expertise and early customers, a corporate accelerator itself embodies some or all of those roles. The general accelerator offers paving stones along the founder’s path. The corporate accelerator is a destination.
Second, corporates know things that VCs and general accelerators can’t. Through long experience and a huge staff, they have information and skills that are not “freely available on the web.” They have intimate knowledge about customers in the relevant industry, about regulations and compliance, about science & technology, about suppliers. It can be enormously valuable to sit so close to the corporation.
Third, having the right corporate brand on a founder’s cap table can be a huge benefit enhancing the value of the startup. (Watch out though, having the wrong corporate brand on the cap table can chill investment interest, so be thoughtful about when you do and don’t take equity.)
Fourth, corporate accelerators don’t necessarily dilute founder equity the way general accelerators do. Indeed many of them are equity-free. This is because at least one primary goal of the corporate is learning, in contrast to the clear primary goal of a general accelerator, which is always growth.
If you’re a corporate leader, don’t let the pressures on general accelerators scare you off. You’ve got things to learn from startups and an accelerator can be a powerful way to learn them.
Calhoun argues that accelerators have to adapt or disappear — there are too many accelerators, they ask for too much irrelevant effort, and what they offer is available for free.
Corporate accelerators on the other hand, done right, can bring massive value. Each comes with access to a unique firm, and what they offer is precious and unique. Done wrong, they’re as bad as general accelerators or worse — watch for a companion post coming soon, on how to tell the difference.
Design carefully, and enjoy!