A Spanish bank has started to run its own Accelerator

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A Spanish bank has started to run its own Accelerator – as a training ground for its own staff, and as a means of shifting its culture towards greater innovation; but startups will have reasons to be wary of corporate Accelerators which can limit their possible outcomes.
Banco Sabadell in Barcelona is among the first banks to run its own Accelerator. It has so far run two cohorts of startups through its 6-month programme, each cohort of five small businesses; and it plans to continue to run two cohorts per annum.
The bank believes that like Barcelona’s Football Club, it will be better if it has its own junior academy rather than have to buy in stars later – at a much higher price! An important motive behind the programme is that of shifting the culture of the bank towards greater innovation.
Candidates can be a one-person business, but the business must have at least one full-time employee, or it or it may already be a team; it must have a minimum viable product; it will very probably already have some sales; and it must be capable of rapid development. The first call elicited 400 responses, of which some 40 were shortlisted, and 5 selected.
The bank provides no funding, so candidates will already have a viable business – on a small scale; but it takes an equity stake from participants of between 6 and 10% depending on the valuation of the business.
The bank works with a partner organisation, and has a close relationship with Telefonica’s Wayra Lab, whose Accelerator in Barcelona works with earlier-stage businesses, but runs to a similar timetable.
Participants may either stay where they are already located or they may come to Barcelona, where they would receive closer mentoring. The partner organisation provides five professional mentors, and some twenty are made available by the bank, involving all sections of the bank. The bank is aiming to increase the number of workshops it provides itself, and to involve more of its own employees in the Accelerator programme; and to involve its entrepreneurs increasingly in internal conferences and similar activities of the bank.
From these first two cohorts, two of the businesses have come into the bank; one has successfully gone its own way; the bank is helping some others to find further funding; and about half have failed.

Jon Bradford of Springboard and Techstars pointed out in a recent note that corporate Accelerators may well be less attractive to startups (unless of course the corporate represents a unique market for startup’s product, or else is simply an investor) than independent Accelerators for several reasons: the programme director may have less experience; corporates will have a narrower range of mentors; they will have little interest or experience in introducing the SMEs to the VC community; and their equity stake and rights may muddy other funding opportunities and limit the SMEs market for future funding.

A variety of seed-beds is helping banks to confront change

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The internet has thrown transactions into a cauldron of change

In a world in which innovation is mandatory, corporates are using and creating opportunities to explore new technologies that could influence their business models and even change their culture. And banking is in the spotlight.

The financial world is facing an earthquake of disruption as mobiles begin to become managers of people’s money; and as they play an increasing part in almost all kinds of transactions. Walmart’s discovery that as many as half its customers who order goods online could be in its stores at the time has highlighted the role of mobiles in transactions; and the rapidly growing volume of peer-to-peer transactions on the internet has highlighted the way in which the internet can displace intermediaries.

The internet is already playing a rapidly increasing role in banking, and the banks are now busily exploring ways in which their online activities will develop; and they are readily looking at innovations that SMEs have to offer. Consequently London is the place to which to bring your ideas.

Fintech Lab London has just completed its second iteration – in which it brought five SMEs to Canary Wharf, each with a bit of wizardry for the financial industry that might be of interest to the banks – its aim, to help them introduce their products through a 13-week development programme in collaboration with the banks. Level39, its location, sits in the middle of one of the world’s most intensive clusters – in Canary Wharf, so not only can it host intensive development programmes like this one; but it can also provide incubation space for the best of them to grow on.

Now Startupbootcamp FinTech is bringing its development programme to London – in partnership with financial institutions including MasterCard and Lloyds Banking Group, which will provide access to a network of industry professionals, and is opening its doors to applicants in August. Innotribe is running the semi-finals of its Startup Challenge competition in London, in which 15 startups and growth-stage companies for the financial industry will pitch for a place in its Finale in Boston later in the year. And Barclays is going a step further in planning to run its own Accelerator – with Techstars later this year; while Banco Sabadell in Barcelona has already done so.

These approaches are about bringing emerging technologies to potential business users, such as 3D printing to the vehicle industry in the East Midlands, TSB grant winners to Life Science businesses in Nottingham, games innovators to Dundee, new playwrights to the National Theatre’s Studio etc. Long ago Mercedes Benz established a culture of encouraging innovative thinking among its suppliers: what is new is the formalisation of this approach, the wider world from which relevant innovations are being sought, and the intensive development programmes like Fintech Lab London and Startupbootcamp FinTech.

May 2014