It’s hard to imagine two worlds more different than those inhabited by startups and big multinationals.
More than half of all startups fail. Those that succeed still struggle for years to become established, keep the cash flowing and prove they are offering something new or better than currently exists.
If a large corporate fails, it makes headline news. They dominate their markets yet face constant threats from startups, existing competitors, turbulent market conditions, and of course, internal complacency.
However one company promises to successfully bring the two together. L Marks, a consultancy with just 10 staff, helps big firms host accelerators for startups.
Its founder Stuart Marks has his feet firmly in both camps, having founded and run several digital startups between 1990 and 2011 which he subsequently sold to large corporates, he tells Techworld.
What is an accelerator?
Startup accelerators are “a fixed-term, cohort-based programme, including mentorship and educational components, that culminates in a public pitch event or demo day”, according to US academics Cohen and Hochberg.
Accelerator programmes are all different, but they generally work by getting startups to apply to join a three or four month scheme where they work in one of the corporate’s offices, during which time they receive mentoring and guidance.
The host company may then choose one or two startups to partner with, invest in or even subsume into the firm.
The story so far
L Marks, which launched back in 2012, has a huge amount of experience in setting up and running accelerators, having done so for John Lewis (its first client), William Hill and DPD. Current clients include global investment firm Winton and international vehicle glass repair giant Belron.
The company is now mainly a consultancy, but it was originally an investment fund set up by Stuart Marks, and it continues to back startups involved in its accelerator schemes with its own money.
In mid-2013 Marks was invited on a trade mission to Israel by 10 Downing Street with a group of IT and marketing directors from big retailers.
On that trip he got chatting to John Lewis’ IT director Paul Coby about how hard it is to find good companies to invest in, and the risks of investing in early stage firms.
They mooted the idea of bringing together startups and established businesses: John Lewis’ accelerator (JLAB) was born.
“We launched it in early 2014 and didn’t know if it would be flash in the pan or something with a future. Fortunately it had legs, so we ran the programme for DPD last year, then did one for John Lewis and another for William Hill,” Marks says.
The team will run seven programmes this year, with more clients to be announced over the coming months.
Why run an accelerator?
“In four months we can help a company to find the best supplier anywhere to solve a problem they’ve got. They might even be able to invest in them. That’s a powerful incentive,” Marks says.
He says there are a number of benefits to running or participating in an accelerator scheme.
“Everybody is learning – not just the startup but also the corporate. You need the company’s board or CEO to see the need for innovation, connect with the scheme and see that these startups will actually really help them,” he explains.
Money is the last reason startups tend to apply for the programmes, according to Marks. Instead, their main incentive is “phenomenal access” to big brands, mentoring and education, he says.
“They do in 10 weeks what would usually take a year. These are very intensive programmes. But if you are working on say, a connected home product, why wouldn’t you want access to John Lewis for 10 weeks?” Marks adds.
Attractive though they may be, accelerators are not an option that works for everyone. L Marks turns down more clients than it accept, he says.
“One of the worst excuses I hear is ‘the timing isn’t right’. It was never the right time for Blockbuster or Kodak either. That attitude can be a warning sign there’s a lot of complacency there and a lack of appetitive to change,” Marks says.
“When the CEO or board isn’t signed up, or it isn’t part of a wider strategy, that is also a sign the company feels it’s just a good PR stunt,” he adds.
However Marks admits they have made mistakes along the way too. He says the biggest so far was obsessing over winners to the detriment of following up with those companies that didn’t prevail in the final pitch.
“Last year we made sure we put in more pastoral care. Just because you haven’t won doesn’t mean you aren’t outstandingly exceptional. So we’ve put more effort and thought into engaging with those companies,” he says.
‘I love seeing an idea get off the ground’
When accelerators work, they can achieve incredible results, according to Marks.
The biggest success story to date is the company that won DPD’s accelerator scheme called PIE Mapping, according to Marks. DPD and L Marks jointly invested £1.5 million into the startup, which specialises in digital mapping, data and routing services.
“It is a great example of how a company can come into a lab, win it then actually find us [L Marks] and the corporate as their main backers after. And that’s why our clients do it. It’s about shared success,” he says.
“I massively enjoy seeing companies grow. I love seeing an idea get off the ground. And I’m very proud we’ve helped some companies get to the next level,” Marks adds.