The Young Entrepreneur Advantage

A Wealth of Options

The types of entrepreneurial programs offered by large companies vary in terms of length, goals, and the extent of the host company’s involvement. Typically, they are traditional incubators tucked into and nurtured by the established host company’s existing infrastructure. Infrastructure, in this sense, can mean tangible materials such as software or physical space, or people, usually in the form of mentors or potential investors.

Microsoft’s BizSpark, for instance, is a vast network serving more than 50,000 members in 100 countries. The program offers technical support, business training, and access to a community of over 2,000 partners. GE and StartUp Health Academy’s Entrepreneurship program, by contrast, will work with only 10 start-ups this year. Participants are introduced in two-day workshops, which reconvene once every quarter, where they collaborate with customers, investors, and advisors and map out 90-day plans. Between sessions, they consult with expert advisors (business executives, marketing leaders, talent scouts, lawyers, accountants, and healthcare professionals), have access to an online resource library, and participate in peer collaboration and networking.

How It Works

Generally, entrepreneurs will submit an application, and the host company selects participants based on how well the interests and goals of both sides align. Most set minimum or maximum benchmarks, a screening process that gives an indication of whether a start-up is capable of surviving the long haul.

Microsoft’s BizSpark, for instance, only accepts start-ups that are less than five years old and have less than $1 million in revenue. It launched with roughly 5,000 start-ups five years ago, and now has more than 50,000. The company also hosts YouthSpark, a similar program that provides free software to students, and sees over 350,000 students participate in its annual Imagine Cup competition.

GE and StartUp Health, on the other hand, has no hard and fast minimum but requires accepted businesses to demonstrate that they are scalable. It will start by selecting 10 start-ups in 2013, the first year of the program. After that, the plan is to add approximately 100 companies per year.

“If you can feel their passion and they have an entrepreneurial spirit, then we usually know they will be able to figure it out and through the right guidance develop something bigger,” says Stoakes. “But if someone is focused on one particular idea rather than why they are doing what they are doing, it can be an indicator that they may not even make the first pivot along the journey.” 

Riley Ennis, a member of the Kairos Society, an international student run organization of entrepreneurs and innovators from the top universities around the world, is working to develop partnerships between Kairos fellows and companies in science, mobile healthcare, and 3D printing, including Johnson & Johnson, GE, and 3D design software company Autodesk, to work through major barriers such as clinical trials. “When I started, I needed millions of dollars, patients, a whole process,” Ennis recalls. “Under a parent company, you get to check all those boxes and not worry about it.” His own biotech company, Immudicon, collaborates with research partners to develop new drugs and devices that aim to detect and treat cancer. 

“Sometimes there is that perception that accelerators or incubators are a little bit out of the league of very early-stage companies, and a lot of the traditional accelerators and incubators will expect students to make the commitment to drop out or take time out to focus on their business,” says Katie Sowa, director of operations at the Collegiate Entrepreneurs’ Organization. “But they are starting to be more accepting.”

The Downside

Even so, hitching one’s wagon to a large company’s program may not always be the best move for an early stage start-up. Sowa urges entrepreneurs to consider the restrictions such an association may place on their companies, and to think long and hard before accepting capital.

“Some programs automatically have certain expectations for giving you a percentage of capital, and this means a certain percentage of equity goes back to that accelerator,” she explains. “For entrepreneurs, giving away equity is a very serious decision to be made. Handled incorrectly, it can be the founder’s downfall.”

John Gallagher, associate professor at Boston College’s Carroll School of Management, also cautions that an explosion of quantity could lead to a decline in quality. Being in an accelerator with poor-performing peers, inexperienced mentors, and no track record, he says, can hurt an entrepreneur.

“There are only so many really good mentors,” he warns. “You might be better off going alone while being plugged into the community via meet-ups and other programs, than accept the branding of an inferior program.”