Large companies such as MetLife, BlackRock, Wells Fargo, Goldman Sachs, and J.P. Morgan are utilizing accelerator programs to integrate an entrepreneurial spirit and innovate the long-standing company’s traditional methods.
The insurance industry has massive size and reach, with global insurance premiums of $4.5 trillion in 2015. As I talked about in my presentation, MetLife is the largest contributor to this market. By expanding and launching their new, first of its kind Digital Accelerator program in collaboration with Techstars, Metlife is able to focus on developing industry-disrupting technologies within the insurance space. The ten chosen startups are hosted at MetLife’s Global Technology Campus in Cary, North Carolina, for an intensive 13-week program focused on the development and acceleration of transformational ideas, with the goal of helping InsurTech founders “do more faster.” In return for 6% equity of each company, the 10 InsurTech startups gain connections with MetLife, $120,000 in funding, and engagement with techstars’ knowledgeable mentor network. Since its creation in 2007, Techstars has worked with the world’s top entrepreneurs, and in 2015, Techstars companies represented 5% of all Series A deals. Some other perks the accelerator provides the startups are:
- Lifetime access to the Techstars worldwide network of entrepreneurs including more than 10,000 mentors; 2,700 investors; 1,200 alumni companies and 180 staff members.
- Access to over $300k of cash equivalent hosting, accounting and, legal support –plus other credits and perks worth more than $1M.
- Access to working and meeting spaces, as well as a lounge
- Fast and reliable wireless Internet access
- Demo Day exposure and other investor connections
- An Equity Back Guarantee (the only one of its kind in the industry)
Similarly, BlackRock has just launched their own accelerator program in collaboration with Fast Forward, to incubate high growth nonprofits in tackling social issues such as global health and education. Fast Forward is a San Francisco-based accelerator for nonprofits “at the intersection of tech and good.” Therefore, BlackRock is partnering with the program in order to use technology and philanthropy to further entrepreneurial innovation. The nonprofit startups selected for the summer accelerator program receive:
- financial support (a $25,000 grant)
- 100 hours of pro-bono services
- connections to mentors who are leaders in tech and philanthropy
Fast Forward’s accelerator program is not as hands-on as Techstars, however, in that the companies in Fast Forward’s portfolio have to find their own housing, office space, and merely meet with mentors once every two week for assistance. However, they receive a grant, instead of a convertible note, and have similar demo day experiences.
Wells Fargo has their own startup accelerator with the goal of “driv[ing] innovation forward” in order to make “banking faster, easier, smarter, and safer for our customers and for the entire financial services industry.” Therefore, the company is focusing on aiding startups associated with analytics, big information, artificial intelligence, cybersecurity, blockchain, robotics, digital marketing, Web of Things, authentication, wearables, operations, and more. Some other features of this program are:
- Non-Exclusivity: startups are free to join other programs and find additional funding along the way
- One-time investments of up to $1,000,000 for a minority equity stake in the company
- Option to continue working across different business lines within Wells Fargo
- A virtual platform that lasts approximately six months
- Commitment to help startups break into the Fortune 500 marketplace via coaching and access to mentors, advocates, executives, and investors
As Nick presented on last week, Goldman Sachs has launched a new incubator program called GS Accelerate, specifically for its own employees to bring innovative tech ideas into fruition at Goldman. According to a company memo, the accelerator aims to generate “ideas that can deliver best-in-class solutions for our clients, take Goldman Sachs into new business areas, manage risk, and tackle inefficiencies in our operations.” If an idea is chosen, the program would provide access to resources, mentors, and capital to help turn ideas into to real businesses within the bank. While this is a great idea, I wonder if Goldman employees—clearly committed to the company and invested in the hard work they do there—could have the same entrepreneurial spirit and passion that an outsider would have.
J.P. Morgan, another top financial services company, has a similar “In-Residence program,” in which outside entrepreneurs “partner with J.P. Morgan’s internal business and technology ecosystem to build, validate, and scale solutions that will yield enduring value not just for J.P. Morgan, but the financial industry as whole.” With no fixed program length or stipend, this program loosely resembles an accelerator in terms of mentorship and exposure, but not as many other benefits. J.P. Morgan therefore provides its facilities, software, and knowledge to the entrepreneurs in exchange for a front row seat to the latest in innovation and potential partnerships in the future. Therefore, while there is no set financial reward upon completion, the goal is that J.P. Morgan will continue the partnership via a commercial agreement, strategic investment, or other forms of funding.
In all of the above examples, massive companies are taking chances on entrepreneurs so that they can focus on creating a great product, while the company can obtain the first mover advantage. Overall, strong partners and mentors are what startups need to succeed. Accelerator programs allow entrepreneurs to succeed by introducing them to people who can help, assisting them with strategy, finding more investors, and more. By working with large companies that clearly have strong networks, both sides benefit. Although some accelerator programs seem more involved than others, it is definitely a very interesting and encouraging trend to see such respectable companies invest in a future of entrepreneurs with technology at the root of every startup idea.
Personally, I find MetLife and BlackRock’s accelerator programs to be more impactful and more in line with a company I would like to work at, whereas Goldman Sachs, Wells Fargo, and J.P. Morgan’s programs seek to merely improve their own company and keep top talent from heading to Silicon Valley. I am interested to see if any of these accelerator programs will make a breakthrough in the insurance, social impact, or financial services sector sometime soon and am excited to visit MetLife and Goldman Sachs next week!