June 28, 2017
by Chris Curran
Whether you’re in Silicon Valley or Columbus, Ohio, actively engaging with the venture capital ecosystem is a smart way to stay on top of emerging tech.
Where do technological breakthroughs come from? It’s hard to predict where inspiration—or lightning—may strike. But in my experience you can drastically improve your odds by immersing yourself in innovation.
While most organizations take a passive approach to discovering innovation, I prefer to engage directly by actively seeking out new technologies. I use a variety of sources for this, from monitoring mergers and acquisitions (for near-term signals) all the way to reading science fiction and playing video games (for the distant future). But for my money, one of the most effective ways to follow the currents of technological change right now is to plunge into the world of small tech startups. This is the biggest engine of innovation in the world right now, with over $58.6 billion in funding going to 4,520 startups in 2016, according to the PwC/CB Insights MoneyTree™ Report. Although those figures are down from the previous year, that’s still an enormous investment in a huge crop of innovators. Why wouldn’t you look to the startup and venture capital community for inspiration?
I find it astonishing more companies don’t do this: According to our 2017 Global Digital IQ Survey, only 7 percent of enterprises use the startup ecosystem as a way to monitor the state of emerging tech.
And there’s no better way to do that than getting involved in a startup accelerator (a program designed to help startups get off the ground quickly, often in exchange for equity) or incubator (similar to accelerators, but usually in-house at a corporate or investor parent).
Even though it’s my job to live and breathe technology innovation, accelerators fast-track my understanding of the potential impact of emerging tech. There’s simply so much information to absorb that I sometimes struggle to prioritize and filter it all. Working as a mentor with an accelerator, as I did last fall in the Techstars internet of things (IoT) program, is one way to be sure the “rubber meets the road” while combining hands-on experience in emerging tech with information gathering.
Techstars is one of the biggest, best-regarded accelerators, and along with Y Combinator and 500 Startups it’s had an inordinate impact on the spread of knowledge about how to start a company, get customers, get to product-market fit, and raise capital. So, of course, it’s a terrific place to find promising new startups, uncover new technologies your company may want to use (or incorporate into its products), and generally raise the level of technological intelligence in your organization.
For the program I was involved in, Techstars selected 10 leading startups focused on the industrial IoT. PwC was involved as a mentor, resource, and partner for the duration of the 15-week program, along with co-sponsors GE, Bosch, SAP, and Verizon. It culminated in a Demo Day attended by more than 1,000 people.
So what did I get out of it? Well, for two promising companies, we’re pursuing ways to connect them with our clients and project teams. Pillar Technologies is developing a small device that can be installed at construction sites to collect environmental data (such as temperature, moisture, air pressure, and the presence of volatile gases) and alert key people if conditions go critical in any way—for instance, if there’s too much moisture that could lead to mildew. Galaxy.ai is applying artificial intelligence and deep learning techniques to analyze cardiac imagery in hospitals, helping to alert doctors to subtle signs of the onset of serious heart diseases. While this is not an IoT initiative on the surface, it speaks to the symbiotic relationship between the two technologies, as AI will be the key to leveraging the data of an IoT ecosystem, driving insight, intelligence, and, in many cases, direct autonomous action or responses.
Strong entrepreneurial teams lead both companies. And both have relevance to PwC’s business and those of our clients. I expect these relationships to pay off over time, both for us and for our customers.
How startups benefit your corporate scouting goals
For other companies, involvement with startups can prove beneficial in a variety of ways, and an accelerator is a truly effective way to help identify the most promising ventures.
- Application to your own operation. Sometimes a startup has a technology that could be applicable in your own processes, helping you create products, serve customers, manage employees, or deploy resources more efficiently and productively. For instance, with Galaxy.ai, while the technology is aimed at medical uses for now, we could potentially use this kind of deep learning in our own company.
- Enhancing your products or services. If a startup’s technology dovetails well with yours, it may be something that could enhance your own product line. That could be accomplished via purchasing the product and then white labeling it or integrating it into an existing product line. It can also be done through acquisition, if the startup’s team and product are valuable and competitive enough.
- Addressing your customers’ challenges. For PwC as a service provider, startups can provide a set of ideas or technologies for our clients to consider using themselves. For instance, Pillar’s technology is highly relevant to the insurance industry, which could use collected real-time data to help prevent costly construction site remediation in case something goes wrong. This doesn’t need to become a product or service that PwC offers; it can simply be part of our value-add to connect our clients with a potential solution to one of their problems.
Making the right connections
There’s a variety of ways for companies to connect with incubators and accelerators, ranging from low-commitment to relatively high-commitment.
On the low-commitment end, you can attend demo days for Techstars, Y Combinator, AngelPad, 500 Startups, or other accelerators. Don’t overlook the smaller, local incubators and accelerators that have sprung up in nearly every major metro area: If your corporate headquarters is in Columbus, Ohio, attending a Columbus-based accelerator’s demo day is a terrific way to identify talent and promising ideas in your own backyard, with less competition from other companies.
Many tech conferences now include startup competitions, which can be another excellent source of information. These are like mini-demo days, often with every contestant giving a five- to ten-minute presentation over the course of a day, with winners appearing onstage during an awards segment later in the conference. You want to be present for the contestants’ presentations.
For a higher degree of engagement that can lead to deeper exposure to startups, consider becoming a mentor for an incubator. Executives in your product, marketing, and engineering teams may regard this as an opportunity to expand their own horizons and learn more about emerging technologies in their field.
At the highest level of engagement, your company can become a sponsor. When you do this, not only do you get unparalleled levels of access to the startups themselves, but you also get an opportunity to interact with the innovation-focused people representing the other corporate sponsors, which provides yet another benefit. You can also get access to other startups in the accelerator’s portfolio, not just the ones in the current class, through its database, alumni events, and social network.
What do you do if you find something good? Here, too, there’s a wealth of possibilities:
- Invest in the company
- Develop a business relationship or alliance
- Hire one or more employees
- Become a customer of the company
- Use those ideas as input for your own product innovation/development pipeline
- Use the incubator as a training vehicle by sending people from your own innovation team into the incubator to learn how things are done.
- While startups mostly want to grow themselves, they may even be open to an acquisition.
Participating in Techstars was such a great experience for me and PwC generally that we are going to be doing it again this spring and summer. For my part, I can’t wait to get back in the mix with a handful of promising early-stage startups.