Marc Hauser is a founder, investor, and innovation enabler with over 15 years of experience in banking and fintech. He is currently the Head of Europe at Tenity, where he helps startups scale their businesses and connect them with leading financial institutions.
If you’re looking to understand the ROI of an accelerator, you may be in one of the following situations:
These are common problems among corporates. And in essence, the key issue is knowing how to prove that investment in innovation brings returns.
In my role as Head of Europe at Tenity, I’m continually working with fintech startups and corporates through accelerator programmes. Based on that experience, in this article, I share some concrete ways that corporates can assess the ROI of their accelerators. I cover:
Interested in finding out more about launching an accelerator or innovation programme? Get in touch with Tenity.
A startup accelerator is a programme, run by corporates, investors, or startup specialists, that provides education, mentorship, and limited funding to startups.
A regular accelerator may involve multiple corporates, VCs, and angel investors that all compete for investment. However, custom startup accelerators allow corporates to build an exclusive programme around their specific needs—whether that’s focusing on climate tech or AI. Typically, corporates benefit from running these accelerator programmes when:
In either case, when run by corporates, accelerators are a collaborative environment that’s beneficial both to corporates and the startups themselves. As a corporate, you get exposure to novel ideas and solutions, while startups have the chance to pitch products and access funds.
But how can you track and measure the benefits of a startup accelerator? This is one of the key challenges when it comes to running a custom startup accelerator. I go into more detail about how to do this below.
A common situation corporates face is that they simply practice “innovation theatre”. They hold meetings, workshop new products, and look like they’re innovating, but they never see or even look for results. It goes without saying that this is largely a waste of resources.
In a previous article on innovation metrics, we shared the KPIs to use to measure the effectiveness of your innovation funnel. We discussed how you can assess the way ideas go through the process from experiment to validation, including their speed and quality.
However, to ensure that your accelerator programmes are a success, you need to measure the results and benefits—not just the process—of that innovation too.
So, what are those benefits and how do you measure them? There are two main benefits you can measure.
Corporates typically build or launch accelerator programmes to access expertise and to develop new services, products, or ideas. To understand how your accelerator is performing, it’s essential to track the numbers of ideas you produce and the collaborations you engage in.
You can get a sense of the success of these programmes by measuring three specific outcomes of your accelerator:
1. The number of touchpoints. Simply counting the number of organisations you work with gives you clarity on the impact you’re having. You can measure two factors to get an idea of this impact:
2. The number of proofs of concept (POCs). POCs are the concrete experiments and studies you undertake—for example during an accelerator—that test and prove the feasibility of your product.
The more of these that you perform, the more “innovative” you can say your accelerator is. A higher number of POCs essentially means you’re producing and proving more ideas that are feasible in terms of technology, regulation, and market fit.
3. The number of investments or partnerships. After a POC, you may choose to invest in a startup or engage in a partnership to roll-out internally or jointly bring a particular solution to market. This step shows that you’ve taken your accelerator to the next stage.
By investing in a startup, you’ll gain strategic influence over their structure, products, and approach. You can measure investments either by looking at the number of individual startups you’re investing in, or the total sum of investments.
These three metrics measure the concrete results of your accelerators, including the networks and relationships you’ve built and the new ideas you’ve validated. As such, they are essential for you to track the impact that your innovation programmes are having.
However, they won’t tell you much about the direct business impact your accelerators are having, i.e. the revenue and growth or efficiency gains that’s attributable to your innovation. To understand that, you need to measure a different set of KPIs (we go into detail about this down below).
For your corporate’s leaders and shareholders, it will likely be more important to see how innovation positively impacts your corporate’s overall revenue and growth or the cost you saved.
Ultimately, this is a more complementary way to measure an accelerator’s ROI. But it’s difficult. Firstly, because it’s much longer term, as you need to wait until your new products go to market or affect your share value. But, also, it’s not always possible to separate out the revenue impacts of innovation specifically vs the impacts of other business decisions.
That said, there are three ways you can measure the revenue impacts you’re accelerators are having:
1. The amount of revenue from new products. If you’ve launched new products as a result of a POC, you can measure their success by looking at the additional revenue they bring.
For instance, if you earn substantial revenue from a product that you developed during an accelerator, you may conclude that the accelerator’s ROI is high. However, it can be useful to benchmark this against other accelerators you’ve run and other products to get a more accurate assessment of its comparative performance.
At the same time, you can also measure your total revenue attributable to accelerators. You can use this to see how much revenue your innovation programmes bring as a proportion of your overall revenue.
2. Costs saved. You can measure how many resources you’ve saved by running your own accelerator to help with innovation or solve a specific problem. For example, by choosing to partner with a startup to develop a specific technology rather than develop it in-house, that counts as resources and money saved.
3. Stock value. You can also measure the increase of value that shareholders experience that’s attributable to innovation. Inevitably, this is a longer term approach, as no single accelerator will have an immediate impact on shareholder value. Instead, it can be something you measure over the span of 5 to 10 years.
Bear in mind when tracking this metric, though, that you’ll need to separate out economic trends that might otherwise influence the value of your company. For example, make sure you’re accounting for any economic downturns, industry-specific shocks, or trends.
These are two concrete ways to track the value that accelerators bring. But for a more rigorous sense of your ROI, you need to link these benefits to the investments into your accelerator—namely, the money, time, and labour that your corporate has put into the program.
One strategy to measure your returns in relation to your actual amount invested is to measure how innovation spending relates to new sales.
For instance, you might spend 2% of your total annual revenue on innovation. But at the same time, 20% of your sales could come from new products. In this case, your innovation spending is multiplied by 10—suggesting high returns on your investment in accelerators.
In any case, if you partner with an innovation-as-a-service provider, like Tenity, the returns on your initial investment will be higher. That’s because it’s much less resource-intensive than to build an innovation team in-house.
There are additional benefits of your accelerators and innovation programmes that aren’t directly measurable numerically. Instead, these are linked to how you’re perceived, how employees feel, and how attractive you are as a company.
Accelerators can help you build a reputation as an innovative company, one that’s solving new challenges and problems and responding to the newest trends.
For instance, Franklin Templeton are increasingly known as a particularly innovative wealth management company in Singapore. We run the Singapore Fintech Incubator with them that nurtures the next generation of fintech startups across the asset and wealth management space in the Asia Pacific region. As such, they’re constantly working alongside and benefiting from fintechs.
This can help with PR, too. For example, corporates can use demo days to touchpoint with senior stakeholders, as well as to reach wider audiences with their products.
Accelerators can show internal teams the value of innovation and showcase the expertise and mindsets required. If your corporate is not currently innovating, an accelerator can be the initial spark that helps you to build a culture of innovation more generally.
These events can be hugely inspiring and can encourage entrepreneurship across the organisation. Rather than just working with teams that may be directly relevant to innovation, they can involve and galvanise the whole corporate too.
Your reputation and internal culture both contribute to making your corporate a more attractive place to work. Accelerators can show potential future employees the mindset, progressiveness, and challenge that they can expect from working with you.
It also helps you to prevent that talent from going to competitors instead. If other corporates are already innovating, they may seem more attractive.
There’s a risk for corporates that if they don’t innovate, they may struggle in a new, more competitive business environment.
We think of innovation a bit like insurance. When things are going well, you might feel that you don’t need it. But you’ll be grateful you spent the resources on innovation when the competition is taking market share and you have newer and better products to launch.
For example, in the UK, fintechs are taking market share away from banks. According to some sources, 15% of revenue and a third of new revenue is going to new entrants in the finance industry.
If you don’t innovate, you may struggle to stay relevant, while watching your market share diminish.
At Tenity, we’ve been working with the wealth management bank, Julius Baer, for a number of years. They’ve run multiple accelerators and they’re an active participant in our fintech ecosystem.
They’ve seen substantial returns from their innovation strategy. They’ve increased the number of POCs they complete, as well as the number of internal teams that are engaged within the innovation lifecycle. Plus, they regularly introduce their ultra-wealthy clients to startups for investment opportunities.
For instance, we’ve recently ran a Web3 custom accelerator with Julius Baer. This was a 5-month collaboration to explore use cases between the wealth management bank and selected startups combining Web 3.0 and wealth management tech.
“It’s a bit of a laboratory for us”, Luigi Vignola, Head of Markets at Julius Baer, has said about Tenity’s accelerators. “We can throw in questions and see if somebody can come up with a smart solution without using too much of our own resources.”
In another example, a partnership between Julius Baer and the fintech, vestr, focused on changing how actively managed certificates (AMCs) work. This collaboration allowed Julius Baer to get the solution they needed within a shorter timeframe and at a lower cost than in-house development.
But the relationship didn’t stop there. In Q1 of 2018, vestr signed a contract with Julius Baer and the MVP went live in Q4 of 2018. In 2021, the POC launched in Singapore.
In 2023, the companies are still working together and vestr has since raised CHF 10 million.
Accelerators allow corporates to access specific innovation know-how and to create new products without having to commit resources to building an in-house innovation team.
At Tenity, we help corporates build their own custom accelerators specific to the problems that they want to solve. It lets you reap the benefits of industry-specific expertise at a lower level of investment.
To learn more about Tenity and how we can help you with your innovation, reach out to us.