In the 13 years since Y Combinator opened its doors as the world’s first start-up accelerator, there’s been an explosion in the number of programmes aimed at giving young companies a growth boost.
Large corporates, including Cisco, followed the Y Combinator lead and soon took on the accelerator idea – each putting their own spin on the format and angling it toward solving their own business challenges. Earlier this year, Nesta reported that more than half of the UK’s accelerators receive funding from corporates.
The reasons for this decade-long boom seem obvious: working closely with start-ups helps corporates maintain a connection with the broader innovation ecosystem, and this relationship provides start-ups with growth, development, and funding opportunities that they otherwise might not have access to.
However, there are signs that the state of play is shifting.
While many accelerators, for instance, once required start-ups to give up equity for a place on a programme, this is increasingly no longer the case. Indeed, start-ups that take up residence in Cisco’s innovation centres have never had to hand over equity (and we’ve never honestly thought of IDEALondon or Mi-IDEA as traditional ‘accelerators’).
Perhaps reflecting the shifting relationship between corporates and start-ups, last week’s annual SEP Europe Corporate Startup Stars awards served as something of a summit on present and future of corporate-start-up collaboration.
(It was an award ceremony too, of course: and Cisco picked up a gong for the third year running!)
Taking stock of the relationship
Discussions at the event, which was hosted by Mind The Bridge (MTB) and informed by Nesta and MTB’s ‘Open Innovation in Europe’ report, centred on the future of corporate accelerators.
What role will they play? Are they financially sustainable? Can they adjust to a changing collaborative relationship between start-ups and corporate funders?
These were all welcome questions, and there was a sense that many of the companies represented at the event have been grappling with them in recent months.
At Cisco, we’ve been redeveloping our entire innovation programme over the past 12 months; considering how to optimise our approach to discovery, partnership, and delivery; and working out how our innovation hubs based all over the world can best contribute to our broader innovation strategy.
What’s clear – and was made so at the Startup Stars event – is that procurement is growing beyond investment in terms of its importance to both start-ups and corporates looking to partner with them.
“£1 of procurement is better than £100 of investment,” said Marco Marinucci, founder and CEO of MTB, emphasising the shifting dynamic.
This reflects our growing belief at Cisco that innovation programmes need to maintain a commercial focus. Commercial viability creates both sustainability and an opportunity to scale, and this is proving as important to start-ups as it is to corporate funders.
But with this in mind, attendees at the event agreed, corporates need to get better – and more considerate – at working through procurement with start-ups.
The majority of start-ups simply don’t have the capacity to comb through hundreds of pages of legalese as part of a corporate procurement process. And when their services and solutions are procured, they need to be paid more quickly and promptly than many corporates are used to doing.
The need to stay curious
However, a dogged focus on commercial viability can also cause restraints.
By its very nature, innovation is explorative. It’s about trying new things, testing unknowns. Not every project is going to be a success – and not every proof of concept will be developed into something that makes money. These are facts.
So how do you balance the two: a need to work iteratively and be risk positive with a required return on investment?
This was an issue echoed across the board. All the organisations present already have visible commitments to start-ups and innovation (indeed most of them were being given awards for these commitments), but many complained about having a limited scope in which to do anything speculative.
The rigidity caused by an imperative to make money risks stifling innovation, that much is clear.
As we continue to develop our innovation programme, the ability to work sustainably, creatively, and collaboratively with the whole innovation ecosystem will be vital to the continued success of not just Cisco but all those we work with.
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