How corporate giants help startups land big customers
Companies benefit from innovation, quick execution that startups are known for, while founders get mentors, access to client networks
It’s a little over two years since Neerav Parekh set up his artificial intelligence and analytics startup vPhrase — and he’s already been part of three accelerator programmes in Bengaluru and Mumbai. He’s now set to leave for Hong Kong to join a ‘supercharger’ programme. Hopping from one accelerator to another may seem unusual but for Parekh, who was part of Target Accelerator in Bengaluru, Nomura’s Mumbai-based fintech accelerator and Microsoft Accelerator, it makes sense. Associating with these corporate accelerators helped him sign 12 customers, including HDFC, Kotak and Motilal Oswal,for his products that convert complex data into easyto-understand, written narratives. Over the last few years, large multinationals have started accelerator programmes to benefit from the innovation and quick execution that startups are known for. As the term suggests, accelerators give early-stage startups a burst of fuel through a combination of mentoring and real-world experience, which ups the profile of the startup and helps raise follow-on rounds. Startups enter accelerators for a fixed period of time as part of a cohort of companies. The larger company provides benefits like mentoring, free cloud access and entry to their network of customers. Unlike other accelerators, corporate accelerators look at product and technology synergies between their parent and the startup. Having worked with large customers, the companies are able to provide valuable insights on how to improve a startup’s product.
Ajeya Motaganahalli, director at NetApp Excelerator, says setting up an accelerator is a way to foster innovation. “We only look at startups in the data space where we can help. We got 250 applications for our first cohort last year. For the second, we got 450,” he says. NetApp provides grants up to $15,000 to each startup.
Over 20 multinationals, including Swiss Re, Pitney Bowes, Cisco and SAP, have accelerators in India, according to Nasscom’s 2017 startup report. This has led to the emergence of startups in the business-to-business (B2B) sector — 47% of startups established in 2017 serviced other businesses. Research firm Venture Intelligence estimates that there are 25 active corporate accelerators.
Before he discovered accelerators, Parekh had tried to sign customers for a year, but progress was slow. “Companies take a lot of time to respond, especially when you are unknown. Being in an accelerator run by Target or Microsoft gives you the upper hand,” says Parekh. “We got an opportunity to interact with more companies, which helped us bag deals faster.”
Microsoft’s accelerator programme in Bengaluru has graduated 11 cohorts and focuses on enterprise startups. It gives startups access to Microsoft’s tech stack and use of its advanced cloud services in areas such as big data, IoT and cognitive services. Some like Intel and Cisco provide funding, while others facilitate discussions with venture capital funds.
Former PayPal engineers Srikanth Parthasarathy and Ravi Madhira started Scalend Technologies, a data insights company, in 2015, but had trouble connecting with customers. Last year, they joined NetApp’s fourmonth accelerator programme. It led to Scalend partnering with the $5.5 billion data management company to sell a product.
For NetApp, partnerships make it easier to attract customers. “We now sell two products instead of one. It is easier to bid for customers since Scalend’s product is quite innovative,” says Motaganahalli.
Rehash Technologies, a chatbot application company that just graduated from Oracle’s six-month startup accelerator in Bengaluru, got free cloud services to build applications, access to Oracle’s database architecture and mentoring sessions. “They asked what support we needed and provided it,” says Shruti Sinha, co-founder of Rehash. “We met Oracle’s founders who spoke about their time as a small company. It inspires you.”
Pari Natarajan, CEO of management consulting firm Zinnov, says Indian corporate accelerators are formed by the company’s engineering team. This gives startups direct access to technology help. “In other markets like the US, accelerators are started by the company’s venture arm or sales team. In India, startups lack knowledge of deep technology. By working with the engineering teams, they are able to get technical mentorship which improves product performance,” he says. Startups are aware that corporates benefit from them too. Says Parekh of vPhrase, “The main intention is to see if the startup can work with the company in the end.”
Blog Source: The Times of India