The rise of the challenge-driven accelerator

KPMG Innovative Startups heeft een duidelijke missie: bridging the gap between corporates en start-ups. Hiermee positioneren zijn zich als dienstverlener op een unieke manier in het ecosysteem in Nederland. Tijdens het interview met Daniël Horn, co-founder van KPMG Innovative Startups, attendeerde hij mij op een nieuw soort accelerator in London; het bakery model. Ik heb Daniël, met zijn team, uitgenodigd om daar een blog over te schrijven.

 

The London-based accelerator for tech companies in advertising and marketing called The Bakery is nothing like the typical accelerator program. Rather than simply offering startups workspace, mentorship and funding, The Bakery is out to connect corporates and startups to jointly develop new products. The Bakery believes that both parties are stronger together: startups can help large organizations to become more agile and corporates have deep pockets to fund their development. This new type of accelerator has the potential to transform both the agencies’ and accelerators’ business model. There is a clear benefit from starting with a desire/need from a corporate: the demand is already there. This article goes deeper into the format we call the “challenge-driven accelerator” and explains how this model differs from the traditional accelerator model. 

 

TRADITIONAL ACCELERATOR MODEL

Startup accelerators have become increasingly important in the tech startup scene over the past years, accompanied by a dramatic increase in the number of programs. Accelerator programs aim to speed up the growth and consequent success of early stage startups, typically by offering workspace, mentorship and funding. In contrast to incubators that merely offer housing, accelerators provide an active program focused on spurring growth of the startup. However, the difference between the two is blurring. Well-known accelerators are Y Combinator, TechStars and Rockstart Impact. Out of these, Y Combinator is by far the most famous accelerator with over 800 startups that participated in their 90-day program which brought forward companies like Airbnb, Dropbox and Reddit. Amsterdam-based Rockstart, in contrast to Y Combinator and TechStars, has a longer program consisting of 150 days during which startups can fine-tune their business and prepare for scaling. Alumni include Peerby, Owlin and Cupenya.

 

CHALLENGE-DRIVEN ACCELERATOR

The Bakery is the first challenge-driven accelerator in the ecosystem. The Bakery focuses on a specific group of startups: tech-focused advertising and marketing companies. Unlike other accelerators it works from a challenge that arises at the corporate side. The Bakery connects startups and corporates to help them gain mutual benefits as startups gain access to corporate clients while corporates can use open innovation to tap into the innovation capabilities of startups. Using existing tech solutions of startups, corporates can take lower risk against lower costs while it allows for rapid experimentation and a creative mindset. Ultimately, The Bakery specifically aims to help the advertising industry transform its business model by means of its format.

 

ELEMENTS OF THE CHALLENGE-DRIVEN ACCELERATOR

This new kind of accelerator could be transported to other industries like energy, financial services or health. The challenge-driven accelerator uses a set of elements that are inherent to its success. First, the challenge-driven accelerator focuses on a specific challenge that arises on the corporate side in the case of The Bakery. This ensures the demand for the innovation, the client is already involved and has a clear objective. Secondly, residence in the program is of temporary nature during which the process goes from meeting to innovating in only 10 weeks. Lastly, The Bakery has a value-based revenue system, the company takes a part of the (startup – corporate) deal. Instead of taking equity, the accelerator takes a performance-related commission once the solution goes to market.

 

THE FUTURE ACCELERATOR?

Even though The Bakery has acquired some reputable clients such as BMW, Unilever and Virgin, it was already founded back in 2013. The model seems to be working for companies in the marketing and advertising space, but has not found its way to other industries (yet). It might be interesting for other existing or new accelerators to consider adding elements from the challenge-driven accelerator model into their current model to gain competitive advantage in the congested market for accelerators. Ultimately, this can create a new wave of accelerators in the ecosystem, disrupting the accelerator space. Working for KPMG Innovative startups, we are now in the midst of developing a challenge-based program.

 

KPMG'S EXPERIENCE WITH ACCELERATORS

KPMG bridges the gap between the corporate and startups. One of the activities is to design and run an innovation engine that can generate minimal viable products from successful ventures. The developed products and services can help to future proof or create new business models. KPMG’s experiences include supporting the blueprint of Holland Fintech (the Dutch Fintech community), the setup and management of the largest energy accelerator in Asia-Pacific called Energise, and Fintech Hub Stone & Chalk in Sydney, Australia.

 

By: Daniël Horn & Sander Verberne, KPMG Innovative Startups