CEO Guide to Business Incubators

Accelerators Are No Longer Just for Tech Companies


Accelerators Are No Longer Just for Tech Companies

Photograph by Gerenme/Getty Images

Turner Broadcasting (TWX), home to the cable channels CNN, TNT, and TBS, needs all the friends it can get in the startup world. The media industry is in upheaval as people increasingly watch television shows online, get their news from Twitter, and use mobile devices to stay connected.

To keep abreast of the changes and find potential partners, Turner’s staff regularly networks across Silicon Valley. But over the summer of 2012, Turner went a step further by giving startups a crash course in the media business.

Turner founded Media Camp, a three-month academy for media startups that offers mentoring, introductions to key executives, and some cash in exchange for a small investment stake. Such programs, known as accelerators, are widespread in the technology industry. Early investors hoping to find the next Facebook (FB) operate most of them. A few, such as Turner’s, are created by corporations that want to get to know the startups, potentially do business with them, and perhaps acquire them later.

“Sometimes—casually, over meals together—we have an a-ha idea about something we can do on our own or in conjunction with them,” says Balaji Gopinath, vice president of emerging technology for Turner Broadcasting. “It’s two sets of minds coming together to create a new opportunity for both companies.”

There are no statistics about how many corporations have established accelerators. The number is relatively low but growing. Earlier this year, Deutsche Telekom (DTE:GR) joined the short list by opening an accelerator in Berlin. Next year, Volkswagen (VOW:GR) plans to open one in Sunnyvale, Calif., for auto-related start-ups.

Corporate accelerators and their close cousins, incubators, which nurture companies for years, offer no guarantee of success. Around the time of the original dot-com boom, a number of well-known companies founded accelerators but eventually changed course. Coca-Cola (KO), for instance, teamed up with Georgia Tech University in 2001 to open Fizzion, an incubator for start-ups that it hoped would be helpful to its food-and-beverage business. The incubator eventually closed. (Coca-Cola declined to give the reason for the closure.)

Toby Stuart, a business professor at University of California, Berkeley, who focuses on entrepreneurship and innovation, is skeptical about corporate-founded accelerators. They are fashionable during tech bubbles but then go out of style after the market sours, he says.

Companies are mistaken if they think accelerators can make up for a lack of internal innovation, Stuart adds. Employees inside large companies frequently have good ideas, but they often have trouble getting money and executive support to develop and commercialize them. “That problem tends not to be solved by having 20 startups under close observation,” says Stuart, who is also a director for U.C. Berkeley’s student accelerator.

Gopinath, who heads Turner’s accelerator, has no such worries. Turner does indeed innovate internally, he says, but he acknowledges that large organizations can be slower than those with a fraction of the staff.

What Turner is looking for with its accelerator are startups a step or two beyond the idea stage. To be considered, companies must at least have a product in beta testing and a minimum of three full-time employees. Nearly 300 startups from as far away as Australia applied to Media Camp, which was held in Turner’s San Francisco office. From that pool, Gopinath’s team chose six companies based on their product, team, and strategic fit with Turner’s businesses. The lucky few selected got $20,000 in exchange for up to a 6 percent stake. The investment is just icing on the cake, Gopinath explains, and not the accelerator’s primary goal.

Unlike some other accelerators, Turner’s does not include free office space for participants. Companies must use their existing offices or—if they’re from out of town—find temporary space during the duration of the program. As part of the academy, the startups are invited to two meetings a week for workshops, schmoozing, and brainstorming with Turner staff and guest speakers. Companies get introductions to executives across Turner’s parent, Time Warner, which also has movie and magazine-publishing divisions. Additional Media Camps are planned for next year. In addition to a class in San Francisco, there will likely be one in Los Angeles and possibly one in a third location.

Brett Welch, chief executive of Switchcam, a Media Camp graduate, called the academy a fantastic experience that taught him how the media business operates while also opening doors. Building relationships with Turner’s executives would have otherwise taken a lot of time and effort, if it could be done at all. “We were greeted as insiders,” Welch says. “We were the chosen ones.”

Switchcam’s technology takes video clips of a single event and organizes them all in one place online. It can mesh together clips from several people at a Coldplay concert, for example, so that viewers can flip between different angles. Prior to Media Camp, Welch and his Switchcam team had gone through another accelerator, 500 Startups, while getting his company off the ground. Although useful, that accelerator, which is led by early stage investors, did not offer much personal attention, media expertise, or follow-up mentoring after graduation, Welch says. “Start-ups generally have a lack of allies,” he says. “You need allies to win. Turner is a very powerful ally to have on your side.”

The structure of corporate accelerators varies. What works for Turner does not necessarily work for others. Volkswagen is conducting its program, for example, in partnership with Plug & Play Tech Center, a long-time Silicon Valley accelerator. Startups accepted into the three-month program get free office space at Plug & Play’s facility along with coaching, meetings with Volkswagen staff and potentially use of company cars to test products.

Unlike Turner, no investment is involved. However, Chuhee Lee, deputy director of Volkswagen Group’s Electronics Research Laboratory, which is sponsoring the accelerator, said his company would certainly consider an investment if a startup in the program turns out to be a good fit.

“This program is really to let the startup community know that yes, they can always come to us at any point,” Lee says. “But with this program, we are hopefully making it even easier to find us.”

Kopytoff is a Bloomberg Businessweek contributor in San Francisco.

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  • TWX
    (Time Warner Inc)
    • $84.26 USD
    • -2.52
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