5 Reasons to Invest in External Startup Accelerators – Even if You Have Your Own

Recently I was asked about the benefits of investing in external accelerators (startup accelerators not owned by the business investing in them). Though people understood the value in investing in specific startups, and in setting up internal accelerators, they did not see value in investing in an external accelerator.

I have worked with organizations that invested in external accelerators, even when they had their own accelerators. Here are five benefits we experienced:

They enable your company to cast a wide net

External accelerators can provide you with exposure to emerging areas you may not otherwise encounter. It’s often these non-obvious areas that lead to the most interesting opportunities and insights. If you are concerned about going too far outside your comfort zone, some accelerators may provide you with exposure to both domains which are obviously connected to your business, and to areas that are not – or may not appear to be. This type of accelerator might be a great choice if you don’t have a lot to invest.

They can expose you to emerging technologies in other regions

Depending upon your location and the accelerator’s, they may expose you to emerging technologies, approaches, and business models that are getting heat and traction outside your geography, or only in the regions in which the accelerator is investing. While working with external accelerators we saw some heat emerge in specific cities or regions that was far ahead of some markets in general.

They provide opportunity for early investment

Many accelerators offer investors or sponsors an opportunity to become early investors in companies incubating within. In some cases they may even offer a first right to acquire companies at specific stages. This enables investors to have many of the advantages of investing early on their own, though with less cost and, possibly, less early stage risk.

They inform strategy

When reviewing the accelerator’s portfolio, or receiving more detailed updates from projects you are interested in, you will be exposed to information regarding topics such as emerging technologies, research, emerging communities of interest, or user needs. This can inform your own strategy and give you ideas regarding moves you can make in your existing portfolio, or even inspiration to build something new.

They keep your finger on the pulse

Participation in accelerator activities, and interaction with their entrepreneurs, will likely expose you to details regarding evolving and emerging domains. You will be able to learn where the heat is, whether there are emerging or established market leaders, what technology is driving advances, and where others are investing.

The right external accelerator can become a force multiplier for your innovation and business development teams. They can also be a relatively inexpensive way for you to gain the previously discussed advantages, so you may be able to make small investments in a few accelerators to gain broader advantage and exposure. They can also bring a lot of positive energy to your team.

What is your experience with external accelerators? Have you invested in any? If so, why, and what benefits did you see? If not, why not?

George Watt is Founder of NovaLean and co-author of  “Lean Entrepreneurship: Innovation in the Modern Enterprise” and “The Innovative CIO: How IT Leaders Can Drive Business Transformation”.

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