Are corporate incubators over-hyped?

In April 2017, we gathered a unique group of DAX-clients and large mid-sized companies in our Frankfurt PwC Strategy& Experience Center. Participants were heads of corporate innovation, heads of corporate accelerators / incubators or venture funds across such diverse industries as automotive, chemicals, retail, consumer goods, financial services and many more. All were brought together by the same question, nicely phrased by one of our more mature participants:

"How do I reach as many top quality global start-ups as possible to leverage their significant R&D (=VC) funds, and how do I use those to most rapidly scale up my core business?"

Followed by a good introduction of StartPlatz as one external accelerator example, we had a lively debate around today's challenges - interestingly pretty common across all participants:

1. SOURCING: How do find the right startups? What has to change in Germany and Europe VC landscape vs. US and Middle East - e.g. don't we have to drastically change expensive pricing logics of European accelerators?
2. ACCELERATION: What's the right Management support and operating model to make the chemistry between corporates and start-ups work?
3. SCALE-UP: What is the best way for corporates to really leverage start-ups to scale up their core business, rather than playing around with tiny innovation representing less than a few percent of revenue?

We spent an engaged discussion on success factors to address these challenges, inspired by our Experience Center and a highly networking-driven environment. Some of the themes discussed include:

1. TRANSPANRANCY AND CLARITY: Know your real objectives - are you looking for new technologies or services, do you want to drive change in your core business, do you want to grow equity, are you looking for seed or later stage investments, ...?
2. DISTINCTIVE SERVICE OFFERING: Not that surprising, but are you 100% clear about your corporate value proposition to attract the best global startups (and no standard should be lower)? Why should a start-up not go to another global accelerator program?
3. APPROPRIATE DELIVERY: What is your operating model to get the best out of your resource and financial investments? Don't put too many chains on the rocket (if you are looking for insights in digital M&A challenges, read this article).
4. SMART SELECTION: Be picky on where you really invest, both for quality and prices.
5. STRONG CORPORATE LINK: Find a way to really make the start-up innovation capabilities and funds impact your core business. For many companies this might not even require financial investments in the first place, but opening up your core business for start-ups in smare, lean ways. Check out BWM Startup Garage for a really innovative "client venturing" approach that is neither an incubator, nor an accelerator or venture fund.
6. CREATE MARKET TRACTION: With everything you do, focus on creating real market traction fast. This requires rapid processes, ruthless customer orientation and the willingness to fail and take consequences.

Thanks a lot to all participants you joined our event, we're looking forward to welcoming you again, soon!

Jonas & Benedikt

[email protected]

[email protected]