- Receiving support from these programs can increase a startup’s chances of attracting investment
- Hackathons, incubators and accelerators can help startups at different stages of the development process
- Hackathons are specifically designed to boost your startup that’s in the idea development stage
- Incubators tend to target startups that have a foundation for their business plan, but need support building this
- Finally, accelerators are designed for existing, fast-growing startups, who already have a business model in place
It is becoming increasingly clear that in order to not only thrive but simply to survive in the current innovation-economy, most large businesses should look to collaborate with external startups and entrepreneurs in some shape or form.
However, as has been previously highlighted, there are several elements, including the gap in cultures between both firms, which may impede such partnerships.
Another element worth considering when looking into coprorate venturing collaborations is whether the startups and their products or business ideas in question are developed enough to enter these partnerships.
However, if a successful partnership can be set up, it is evident that entrepreneurs who receive support when accelerating their startups have higher chances of attracting investment. Yet, to maximise the gains from joining one of the programs, it is important for startups to be well informed about the purpose of each program within the innovation ecosystem and to participate in the programs that suit their needs best.
There are several programs that can benefit startups at every stage of the development process, from detailing the specifics of the idea to mapping out marketing and financing plans. We reviewed three programs which each apply to a different phase.
Starting out: hackathons
Hackathons are generally considered most beneficial for startups or entrepreneurs with a vague idea or concept for a business or product within a specific industry, however businesses of every shape and size are increasingly shifting towards these events to solve challenges.
A hackathon is often more broadly defined as a fast-tracked workshop that brings groups of people, usually within similar fields of study, together to develop innovative solutions to problems.
The main emphasis here lies on working as part of a team to understand an actual and relevant problem, define the workflow of the problem-solving and to grasp the eventual outcome that was achieved in a practical context.
In the past, the organisation of hackathons has been narrowly confined to the software-based industries. However, these events are increasingly being organised in a variety of fields, and across several industries. Moreover, organisers are also beginning to realise it can be beneficial to bring together cross-functional teams to look at the problem from different angles.
Leo Exter, Chief Energiser at Hack Belgium and Hack Belgium labs, reflects on this shift in his definition of hackathons:
They are one, two or three-day events where a group of people from different industries and different walks of life come together to collaborate (openly) on a defined specific set of objectives to reach a goal.
Nationally, Hack Belgium is an example of how these programs are growing in popularity, but also how they are proving themselves as effective and fast-track systems to problem-solve and innovate.
As the biggest open innovation event in Belgium, it usually presents over 30 societal issues in need of creative solutions, and encourages fellow entrepreneurs, innovators, startups and enterprises to co-create, learn and educate each other.
However, at times, the effectiveness of these programs has been questioned, with some critics professing they can at times be seen as marketing stunts for some companies. Exter acknowledges this criticism, but argues that ‘when organised systematically and structurally, these hackathons can be extremely beneficial.’
Hack Belgium has also developed a formula to prevent these problems from creating barriers for productivity. We have the tools and the vision needed to ensure a useful and productive hackathon.
Exter clarifies: “Too often, ideas go to waste. Hack Belgium makes sure that the providers of the idea are taken seriously and get to work with the corporation that issued the hackathon.”
Digital problem-solving in real life
During this ongoing pandemic, hackathons have been organised globally across many fields of study to solve problems and find practical solutions around the COVID-19 outbreak.
During the weekend of March 20-22, 2020, the federal government organised a state-wide hackathon, #WirVsVirus, with over 42,000 participants. Rather than meeting in the usual large multi-purpose halls where such events are held, the crowd gathered online to put their heads together from the comforts of their homes. The result: the development of over 800 ideason topics ranging from shopping and childcare to symptom monitoring.
The European Council led a similar event titled #EUvsVirus, which brought together people from 141 countries and many different areas of expertise from across the EU and the world to help find solutions. With the support and funding of the council, the top ideas, which were selected by the jury, will be transformed into reality.
Preparing for future innovations
As hackathons are being more widely organised across several professions, they are also starting to be incorporated outside business structures. Academics for Technology (AFT) is a non-profit organisation that hosts events, including hackathons, to encourage students to explore different innovative technologies and entrepreneurship from an early stage in their career.
AFT’s President Roald Parmentier told us more about the hackathons in particular: “It is usually a process of 24 hours where a team starts with a certain topic and a corresponding challenge to solve. A team usually consists of programmers, designers and business strategists.”
Parmentier also recognises the common misconception that hackathons are often limited to (cyber) hacking and programming. He explains: “We focus more on the development of innovative solutions which can evolve into startups. This format is also more relevant for any student aspiring a career where teamwork and problem-solving play a key role.”
He adds that, although they have their differences (‘We see a good mix of students from different backgrounds and with varying interests’), one thing brings all participants together: “Something most of these students have in common is what we call, an entrepreneurial interest. These are the kind of students that are always on the lookout for new challenges and opportunities to develop themselves.”
Just as hackathons are increasingly being organised across a spectrum of professions, AFT tries to incorporate this variety in the challenges that are presented:
Our challenges don’t focus on one specific topic, but span over a range of topics. When it comes to sourcing these challenges, we work together with our main sponsor and global player in the broadcasting world Mediagenix, the city of Leuven and some challenges will be presented to us by startups.”
Whereas in most hackathon programs, the emphasis lies on the innovative solution or idea which derives from the problem-solving workshops, the main goal for AFT’s hackathons is the development of the participants’ skills.
Parmentier explains: “For example, their problem-solving mindset will be put to the test in the early hours. The advantage here is that the students get to know themselves better and are able to better determine their strengths and weaknesses.”
However, he highlights that, similarly to more industry-specialised hackathons, this program also allows students to get in touch with professionals and experts from established businesses, which can have a positive effect on the students’ early careers.
We see this as an opportunity for both the student and partner, as both can get to know each other in a way that strongly differs from a job fair or company visit.
Next level in the development stage: Incubators and accelerators
For startups who are beyond the stage of developing an idea, and are instead hoping to present their existing idea to investors or established corporates to eventually market the product, participating in incubators, or accelerators, can be more beneficial.
As a result of the digital revolution and its growing impact on companies, a growing number of new businesses are being created in the Incubator & Accelerator (I & A) landscape, even within the more ‘traditional sectors’. An increasing number of companies are now organising their own in the context of their innovation needs as part of corporate venturing strategies.
To define both programs individually, it can be helpful to compare their similarities. The main goal for both incubators and accelerators is to groom the startup to become valuable in the eyes of investors or corporates. The former ‘incubates’ ideas to devise a business model, whereas the latter ‘accelerates’ growth of an existing company.
However, to fully understand both programs, it may be more relevant to compare how they differ. We spoke with Hugo Hanselmann,the CEO of B-Sprouts, an international incubator and accelerator that helps entrepreneurs and startups sprout their ideas and businesses to flourish within their respective markets, to better understand the distinction.
Although both programs are tailored to boost your startup (especially one that has already developed a business plan), there are still two major differentiations in the level of development. Here, the emphasis mainly lies on where the startup is in this development stage.
Incubators mainly support startups that have a marketable idea but are at the beginning stages of building their company.
As Hanselmann explains, this program is ideal for startups that are still developing a growth plan:
At this stage, the startups usually possess an idea to bring to the marketplace, but no business model or direction to transform the innovative idea to reality. An incubator helps them turn it into a product or business, to get to the stage where the idea becomes a product and has all the basic elements to set up a business. Then we would say: ‘Let’s work to build elements around that idea. What are you missing, how do you build a minimum viable product (MVP) to validate it in the market, and what else is required to have a viable business plan?’ That to me is the work of an incubator, to help this person or people get to this stage.
Incubators are often more long-term to open-ended arrangements, as the programs focus on learning and development. The average tenure usually ranges anywhere from six months up to more than a year.
Boost your start up with accelerators
This third program historically developed following a second wave of popularity within incubation programs during the mid 2000s. An accelerator program can help advance the success of existing, fast-growing startups who already have a business model in place. From this foundation, accelerators can strengthen the necessary skills through intensive training and mentoring, and by introducing the entrepreneurs to investors or a cohort of companies.
Our acceleration program, ‘the Fields’, is open to startups who have passed through our incubation program, as well as to those with a minimum team of two people and an established business model or validated product. The goal here is to build on what they already have. What we do is look at the business model, the team and how the team works together, and then we run an assessment and after this assessment we identify the gaps. From this point, we try to figure out how to fill these gaps in order to accelerate growth
In comparison with incubators, accelerators usually run on a set time frame of three to six months. B-Sprouts’ programs usually run for three months, ‘during which several workshops hosted by external experts are organised on a weekly basis’, says Hanselmann.
Typically, at the end of the three months, the startups prepare presentations on the growth and development they achieved during the program, based on what they learnt in workshops and from mentors.
Differences and similarities
Hanselmann highlights that this is where the similarities come in: “There are certain elements that always come back. We organise training sessions, both in our acceleration and incubation programs, and some of these are similar ,” he continues. For example, both programs include pitch training, where startups are taught how to pitch their ideas and how to present their product to an audience and investors.
Mainly these workshops depend on the gaps we discover within the startup’s development. Both programs may at some point focus on legal structures or financial planning, but also marketing and PR strategies. All those elements are probably happening in both programs, but at a different level.
There are also certain specific elements that are tailored to the vertical of the startup. However, Hanselmann emphasises that, in general, it is more about the guiding and ‘filling the gap’ process than about the industry the startup is in: “The challenges that a startup faces in general are usually pretty similar.
Then there are elements that we would add either based on the vertical or the gap assessment that we do at the beginning of the program. From there on, we can get specialist mentors and trainers in based on the specific needs.
Hanselmann recognises a shift within the ecosystem of these programs, noting that a lot of institutions, from universities (look at AFT) to banks (ING and KBC have both, in the past, organised startup accelerator programs) are adopting these programs internally. He also has come to realise that, and on the other hand, ‘here is a certain fatigue in this space, so we need to pivot ourselves’.
When asked what sets B-Sprouts apart from other, similar programs, Hanselmann reflects mainly on the international aspect:
We don’t only bring together startups and entrepreneurs from several countries, we also have international mentors, and they are all experts or seniors in their fields. Not only can they offer guidance and support to the startups, they can also provide insight on an international scale. Furthermore, we have run programs where over half of the startups came from abroad.
Connection to Corporate Venturing
According to Antwerp Management School’s research, the latest forms of incubation mechanisms are usually included within this category, such as excubators and start-up-as-a-service. However, it also includes the new generations of incubators and accelerators including Open Innovation / Corporate Venturing, as they can help in attracting and retaining talent if companies can strategically play out and manage these. Research also finds it ‘can help to realise and handle disruptive innovation in order to ensure the long-term relevance of companies’.
Hanselmann explains that, from a collaboration aspect, the benefits are evident for both sides, but these programs assist in making them feasible: “Sometimes people have a certain attitude towards relying on others, but you need a village around you to be successful, and both these programs, in part, allow you to build parts of this village around you. ”
He refers to the same cultural gap which John van der Linden referred to in ‘Corporate venturing: bridging the gap through innovation’. “Some corporates are not the type of companies that organise these programs, mainly because there are such large gaps between the two cultures of a corporate and the startups, too big to bridge by themselves.”
Within this entrepreneurial ecosystem, where corporates are increasingly cautious towards the younger, creative talent in the startup world that are able to reinvent business models and technologies, these programs are particularly relevant when it comes to bridging the cultural gaps between both sides, as they can act as ‘middlemen’.
“That’s where these programs and companies like ours come in, to bridge that gap and to help out both ends to connect. I often find that if there is no mediator or middleman, and then things can be hard to piece together. This gap is our space to work in,” Hanselmann concludes.
Programs in practice
Micro Flavours is one such project which was made possible in part because of such programs, and which, through participating in them, secured its long-term relevance. Dario Vunckx, the firm’s co-founder & CEO/CFO, joined the program as a student to explore growing food indoors using the hydroponics method.
This Belgian business aims to supply big cities with locally grown fresh vegetables by using an alternative technique of growing plants, which does not use soil, but instead involves the root systems of plants being supported in a water based, nutrient rich solution.
Hanselmann recalls: “He came into B-sprouts and he simply started building his water tank, which was this whole construction. Then he started growing his plants, and in the meantime, we helped him type out his financial plan, set up his market plan and connected him with people who were relevant to this project.”
Vunckx says: “Participating in this program definitely helped me to launch my startup. B-sprouts specifically assisted me in developing a unique business model. The program itself was really hands-on and their network is filled with experts, which we could always reach out to in order to challenge our business model.”
When asked whether he would be where he is now without taking part in the program, he says: “It would have taken much longer. B-sprouts really helped me get the basics right and in approaching first potential customers.”
In the final part of our ‘Case Study: Insights into Corporate Venturing for Startups’, we research how corpo-working spaces like ours can help boost your startup further to expand your business and connect with other professionals and larger companies.