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    The Next Silicon Valley

    The rise of the corporate accelerator: the new R&D?

    By Nitin Dahad | October 31, 2015

    Corporate accelerators have secured a foothold in the UK and Europe and appear destined to play a role in the future of the region’s research and development practices.

    Speaking at a recent accelerator event in London, Danny Bartlett, head of communications for Wayra UK, Telefónica’s startup accelerator, noted, “We believe corporate acceleration is a normal evolution within the ecosystem. Start-ups have always been trying to get closer to large enterprises and corporates want to keep their ear to the ground when it comes to innovation.

    “How they move forward together in achieving goals that are mutually beneficial will be the hardest part to master.”

    According to Forbes magazine, 69 companies have launched ‘corporate accelerators’ around the world since 2010, prompted by the disruption threat from start-ups. Small, agile start-ups are, by nature, more nimble and therefore, more capable of innovating than large corporates, where standardized processes, and sometimes internal bureaucracy,  often hinders any new project or idea before it can get off the ground,

    Corporate accelerators are already a fixture of US business, accounting for half of all corporate accelerators worldwide. But Europe and Asia are gaining ground, with Asia now ranked 2nd and Europe 3rd in promoting and supporting the accelerator concept.

    Europe’s top accelerators include Orange Fab, the accelerator of the eponymous telecommunications operator, Microsoft VenturesWayra, and Hub:raum. The latter provides seed funding for startups that have the potentially to transform new markets for parent company Deutsche Telekom.

    Entrepreneurs and venture capital firms have come to recognize that corporate accelerators are now beginning to provide a strong node in the overall start-up ecosystem.  Enlightened corporations encourage entrepreneurship and innovation through the community of startup accelerators, and filter the most viable and promising new ideas.

    According to one expert, corporate acceleration is contributing significantly to what the UK needs to remain globally competitive. According to Gary Stewart, Director of Wayra UK & Wayra UnLtd.,12% of all accelerators in the UK are now owned by large corporate enterprises and an increasing number moving into this space.

    The benefit so far to Telefonica and the start-up community is apparent. Wayra start-ups in the UK have generated over $61M in investment and developed products and services that have enriched the customer experience provided by Telefónica.

    In on example, RotaGeek, an online scheduling platform enables store managers to create and amend their staffing rotations. It’s allowing, O2 (the mobile phone brand of Telefonica in the UK) reinvest £2.5M into improving the customer experience.

    Another, Qudini has dramatically increased good sentiment with Telefonica’s customers across 260 stores, through an intelligent queueing system. Qudini made such an impact that earlier this year, they became the preferred global supplier of queue management for the whole of the Telefónica Group globally.

    The benefits for start-ups are also immeasurable. The mutual benefits for all parties have led Telefónica to establish Open Future_a global innovation and entrepreneurial network, open to partners. Open Future_ manages seven initiatives across 17 countries, with activities focused on three main objectives: to encourage ecosystems; accelerate new businesses and invest in existing opportunities.

    To date, Open Future_ has invested over €500M in 600 businesses – 500  through Wayra. It has signed innovative partnerships with over 60 private and public organizations, including acceleration partnerships with Cambridge Wireless and the Isis Software Incubator. ISIS is part of Oxford University, as well as the UK’s first preventative healthcare accelerator, Velocity Health, which is powered – in part – by global health company MSD.

    Telefónica has also committed $200M to launch the Communications Investment Platform (CIP) in a limited partnership with Coral Group, as well as forming a partnership with Deutsche Telekom, Orange, and Singtel to bridge start-up ecosystems across Southeast Asia, Africa, Europe, Latin America and the Middle East.

    Corporate accelerators fulfill a purpose both for the corporate as well as the entrepreneur ecosystem. With many corporates having cut their ‘blue-sky’ R&D budgets, it seems that the corporate accelerators are taking their place.

    In late October, the UK entrepreneur community came together at its first event highlighting the rise of the corporate accelerator. Over 200 people attended, with representation from around ten corporate accelerators and 70 corporations, including Amazon, Dell, Unilever, and Virgin.