Spanning Two Worlds? Corporate Accelerators and Corporate Venture Capital in Innovation Portfolios

Abstract

This paper tackles a crucial problem in the theory and practice of global innovation strategy: In the face of technological and business model disruptions, often originating in innovative startups, how do companies respond with entrepreneurial ideas? Specifically, how do established companies use entrepreneurial approaches to facilitate access to startup innovation? This research examines the roles of corporate accelerators and corporate venture capital investing. Using a sample of companies with both corporate accelerators and corporate venture capital arms, this study provides preliminary descriptive evidence of the role of both types of external knowledge partnerships with startups. Specifically, the paper points to greater experimentation in CVC portfolios in terms of startup focus and industry distribution relative to corporate accelerator portfolios. At the same time corporate accelerators may provide access to greater geographic distribution in their portfolio companies. A novel algorithmic approach based on natural language processing and machine learning is used to characterize the distributions of portfolio companies. The paper raises questions for further study addressing the potential for complementarity and substitution amongst these two forms of corporate innovation in partnership with startups.