How Corporates Can Test Big Ideas—Without Betting the Farm

In today’s hyper-competitive business environment, innovation isn’t just a buzzword—it’s a necessity for survival. Companies worldwide are on a relentless quest for an edge that will set them apart from the competition. One powerful strategy that’s gaining momentum is the collaboration between corporates and startups through specialized programs designed to accelerate innovation. Enter the realm of Proof-of-Concept (POC) Accelerators.

Imagine a large corporation struggling to keep up with the rapid advancements in technology and market demands. Instead of attempting to develop solutions in-house, they partner with agile, creative startups that bring fresh perspectives and cutting-edge technologies to the table. This symbiotic relationship not only speeds up the innovation process but also opens up new avenues for growth and market expansion.

Recent trends highlight the growing effectiveness of these accelerators. Giants like Airbus, Barclays, and Google have embraced them, recognizing their potential to drive significant business transformation. By outsourcing their POC accelerator programs to experienced providers, these corporations can focus on what they do best while leveraging the expertise of the startups to solve specific business challenges swiftly and efficiently.

In this article, we delve into the mechanics of POC Accelerators, explore their impact on corporate innovation, and offer insights into how businesses can harness this powerful tool to stay ahead of the curve. Whether you’re a corporate leader looking to invigorate your company’s innovation strategy or a startup eager to collaborate with industry giants, understanding the POC accelerator model could be the key to unlocking your next big breakthrough.

The Case for POC Accelerators

POC Accelerators are corporate-startup collaborations that allow corporates to leverage on startups to address specific business challenges that they have. This beats trying to do so themselves, for different reasons:

●      A startup may operate in a different market space which the corporate can leverage. For instance, an insurer may benefit from partnering with a digital health startup, to tap its base of patients who are primed to seek cover.

●      The startup may have different capabilities and technologies than the corporate does and will be more agile and creative in further developing these. For example, a bank may benefit from partnering with an alternative credit scoring business that uses non-traditional sources of information to access the thin-file micro-SME market segment for its loans.

It is not right to think that accelerators require investments into the startups by a corporate. In the case of a POC Accelerator, the startups benefit from the industry exposure and revenue opportunities, which are enough to incentivize them to participate.

Megatrends

There have been significant recent signs of the effectiveness of POC accelerators in corporate innovation, such as:

1. The growth in corporate accelerators – according to Corporate Accelerator DB, there are 71 major live corporate accelerator programmes globally (source).
2. Major corporations have launched them – like Airbus, Barclays, Google, and Telstra which have launched multiple accelerator programs worldwide. This adoption by leading companies underscores the strategic importance of accelerators in fostering innovation.
3. Outsourcing to experts – many corporations are partnering with established accelerator providers to manage their programs. This trend shows a preference for leveraging external expertise to maximize the effectiveness of POC accelerators.
4. Focus on later-stage startups – POC accelerators often target slightly later-stage startups (seed stage and above) that are market-ready. This focus helps ensure that the startups involved can deliver tangible results within the accelerator timeframe.
5. Global recruitment – corporates are increasingly looking beyond local markets to recruit startups with specific expertise. This global approach helps in finding the best solutions to address their unique business challenges.

How It Works

Eliciting Problem Statements

Corporates identify specific challenges or opportunities which are formed into statements they can then use to co-create solutions with startups.

Corporates embarking on the journey of innovation through POC Accelerators often start with quick wins. Given that this approach is relatively new to many organizations, focusing on swift, tangible results helps demonstrate progress and secure buy-in from senior management and board members. These quick wins typically involve collaborations that leverage the existing strengths and market reach of startups to address immediate business challenges.

For example, a takaful insurer could tap into a Muslim travel app's extensive user base to promote Hajj insurance products. This type of partnership can be designed and piloted within an 8-10 week period, covering activities such as product integration, marketing strategies, budget allocation, and setting KPIs for the pilot’s success. This structured approach ensures that the pilot can be evaluated effectively, and if successful, be integrated into the corporate's business operations.

As corporates become more comfortable and experienced with the POC Accelerator model, they can then pursue more complex and co-creative initiatives. These projects might involve deeper collaboration, such as developing entirely new products or services with the startups, requiring more extensive planning and longer timeframes. However, the initial quick wins are crucial for building momentum and showcasing the potential of POC Accelerators to drive significant innovation within the organization.

Targeted Recruitment

Once Problem Statements are formulated, it is easy to convert these into a recruitment mandate. Questions such as what sectors, geographies and stage of startup must be answered.

For instance, if the Problem Statements are quite specific or technical, such expertise may not be available locally, and so the mandate will be regional or global recruitment.

Sector spaces to look into can be determined using generative AI, for example, for the Problem Statement improving lead generation for a life insurer, the sector spaces could include financial planning tools or financial education (fin-ed) providers.

POC Accelerators are usually focused on slightly later-stage startups such as seed stage and above as these are market-ready.

Recruitment activity is carried out almost entirely by the provider, with only the last step (i.e., final round of interviews) requiring the involvement of the corporate innovation team.

Recruitment begins with the creation of a landing page explaining the programme, problem statements, eligibility criteria, dates and benefits. Central to the landing page is the application form, which will feed into a CRM tool, and be used to determine whom to interview.

Promotion channels for inbound marketing include socmed, email marketing, partnerships, media announcements and events such as webinars.

For industries that are technical and focused in nature, outbound marketing may be more effective. This involves the provider taking the sector spaces and searching for startups in each to develop lists. These startups are then contacted to apply to the programme.

The provider will usually conduct their first round of qualifying interviews (usually to about a hundred startups), following which a corporate innovation member will participate in the final round of interviews (usually to about 25 startups). Some corporates opt to have fewer startups selected, and some want to have more startups which are then whittled down in Pitch Day.

Here is a hypothetical example of how a Problem Statement is converted into a target startup:

Validating & Shaping Collaboration Ideas

Once chosen at interviews, startups will go through a process of getting clear about their collaboration scope and how they plan to operationalize it. They will go through a process of mentoring from the provider in which they will identify gaps in their knowledge. For example, an e-commerce ERP wanted to provide inventory financing to its base through a referrals partnership with a bank, and it determined that it needed to know whether its data could be used in credit decisioning at the mentoring.

Startups then are given windows of opportunity to meet with track leads from different department (for a bank this could be Marketing, Risk, Credit, Legal etc.) through what is known as Office Hours, organized by the provider and the corporate innovation team. So, our ERP startup could find when meeting with the Credit team that it is too onerous to change the credit scoring model as it would require central bank approval. This will then prompt it to reshape its collaboration idea.

After Office Hours, and with a bit of pitch briefing from the provider, startups become ready to pitch their idea to the corporates’ panel of judges on Pitch Day. Typically, around 5 startups are selected out of the 25 startups who pitch, determining on the corporate’s capacity for innovation activity as well as the quality of the startups.

Designing the Pilot

At the heart of the POC Accelerator lies the design phase which typically spans 8-10 weeks. Corporates and startups collaborate closely to shape the POC. After the design phase, it moves into development and the POC is then put to the test, its performance tracked against predefined Key Performance Indicators (KPIs).

This is best done with the Working Backwards methodology pioneered by Amazon, where a vision of the pilot is set as a moving target (by writing a brief proposed announcement and updating it every week). For instance, for an e-commerce ERP provider that wanted to do inventory financing in collaboration with a bank, the moving target started with the Ant Financial model but as the weeks passed, the target ended up closer to the model of Jumia Bank in Africa, which was a simple referrals partnership with no data sharing.

The benefits of the Working Backwards methodology is that all participants, from the corporate innovation team to the track leads to the startup (and not to mention the external provider) can focus their efforts and not delay progress unnecessarily.

The pilots are designed through a series of meetings with the track leads, which are organized by the external provider with initial help from the corporate innovation team. There is a specific format of each meeting, so that it is optimized for informed decision-making and for actions to emerge. The external provider attend all meetings and takes minutes and presses for the next meeting. It can also review deliverables ahead of submission and provide advice.

Every week the external provider will meet with the corporate innovation team and provide them with updates on progress and identify asks such as unblocking an obstacle that is in the way of progress.

Ideally, at the end of the Design stage, a Collaboration Agreement would be signed (or at least the commercial terms agreed upon) and that allows something firm to be presented on Demo Day.

Showcasing the Pilot Design

At Demo Day, key decision-makers such as senior management should be present, as the objective is to seek their support and resources for a good POC Development.

Demo Day is not a competition in which some startups must be eliminated. All startups can go into the development stage if they make business sense and receive the support of senior management.

Demo Day typically ends with a media announcement which cements the corporate as being an innovator in the landscape and generates publicity for the startups.

Choosing a Provider

As the orchestrator, 1337 Ventures guides the entire POC journey. From inception to execution, it facilitates seamless collaboration between corporates and startups to transform ideas into tangible outcomes.

There are only a few required touchpoints for the Corporate Innovation team, namely:

1.         attending the final round of recruitment interviews

2.         helping to block office hour sessions with the track leads

3.         supporting the organizing of Pitch Day, e.g., by finding judges and specifying criteria

4.         attending Pitch Day

5.         attending weekly review meetings during the POC Design phase, and assisting in scheduling meetings where not otherwise available

6.         supporting the organizing of Demo Day, e.g., by inviting senior management and booking a venue

As POC accelerators are relatively new, 1337 Ventures is at the forefront. Our experience includes POC accelerators with RHB Group, FWD Insurance and GX Bank. We understand the nuances, the pitfalls, and the pathways to success.

1337 Ventures takes a high-touch approach and this methodology ensures that every POC is meticulously crafted, ensuring impact and not just ideas.

Of importance in recruitment is ecosystem leverage. 1337 Ventures’ ecosystem is a thriving hub of innovation. 1337 Ventures’ pre-accelerator programme Alpha Startups has had over 60 batches with more than 3,000 startup founders. Its public database of startups, muru-ku.com, has over 1,100 startups listed in it. These allow ready access for best outcomes in the POC accelerator.