Why incubator and accelerator programs are a must for disruptive innovation
Chris Barry | Accelerator Program Lead, FIS Impact Ventures
June 20, 2022
Banks, corporates and retailers all look to accelerator and incubator programs to engage with fintechs that offer cutting-edge technology and are pushing the envelope with new innovations in the market.
Often established businesses may not be able or willing to take on the additional risk to their business models directly. They may have gaps in their service offerings or would like to engage with an early-stage start-up to explore new opportunities without shouldering the entire risk.
Accelerator and incubator programs can provide the ability to learn about new innovative solutions, engage with them via proof of concepts and even provide investment or acquisition opportunities bringing them a competitive edge in the market.
Incubator vs. accelerator programs: What’s the difference?
An incubator program focuses on developing entrepreneurs with early-stage business concepts and helps them hone and maximize the opportunity and value play for the idea or early-stage business. Incubators test the business concept and try to poke holes to ensure that there is sufficient value for end users and that the business is going to market with a strong proposition and attractive revenue model. Incubators also help prepare the entrepreneur across all areas of their business by identifying and reinforcing their strengths and addressing areas of weakness. An incubator program provides access to a strong network of entrepreneurs and venture capital firms to build relationships and help the company start off on the best foot.
Incubator programs are typically operated by local non-profit organizations aligned to a regional commerce club, a university or with a corporation’s innovation efforts. The teams that run the incubator programs engage with local community-based efforts and are well-connected.
An accelerator by contrast prioritizes helping to scale existing businesses with typically bootstrapped (owner financed) pre-seed or seed, and even in the early series A or B of venture capital investment. These programs provide help in the form of seminars, mentorship and introductions to helpful networks and relationships, hiring talent pools, corporate structuring and legal education. Accelerators also collaborate with a company to build out pitch decks to raise money for their next growth stage.
Why are these programs so valuable to fintech start-ups?
Accelerator and incubator programs are especially valuable to fintech start-ups in financial services due to of the complexity of the industry. These programs can help a fintech accelerate growth through exposure to seasoned business executives and large set of strategic customers in a collaborative environment with a compressed timeframe. The track record touted by these programs suggests that a fintech will have a refined value proposition and GTM as well as a stress-tested revenue model.
In addition, risk controls, security, compliance and governance requirements all make it exceedingly difficult, costly and time consuming for a new start-up company to break into the market. Most financial institutions are governed by schemes or regulatory bodies that set specific rules and regulations on how they do business, manage liquidity, access financial networks with top grade security and treat their customers. A new, innovative fintech launching in this space may find it challenging to navigate regulatory requirements and will need outside assistance to build out their tech-first solutions to not run afoul of regulations.
A strong accelerator or incubator program sponsored by a market leader such as FIS will help the fintech understand their market fit, integrate or partner with existing financial institutions and their service providers and help them manage the long sales cycles typical of the financial services vertical.
How the FIS Impact Ventures Fintech Accelerator Program is unique
FIS Impact Ventures is guided by the belief that the market – and therefore FIS – needs to be constantly evolving to stay ahead of innovation. Our Fintech Accelerator Program in partnership with the Venture Center identifies and fosters early stage to growth stage firms with game-changer ideas that support the pursuit of a truly frictionless economy. Now in its seventh year, the program accelerates innovation in financial services, fuelling collaboration with FIS clients to bring new ideas to market. It is this part of the program that is unique and mutually beneficial to FIS clients and fintech partners.
“The FIS Accelerator does an excellent job of selecting relevant companies,” said John Buhrmaster, CEO, 1st National Bank of Scotia. “Every year I visit The Venture Center and find nothing but hard-driving companies that are sure to be successful in partnership with FIS. I enjoy interacting with these innovative entrepreneurs and continuing the conversations with companies that have products that may be a good fit for my institution.”
Financial service executives and industry experts can engage in person or virtually with the pre-vetted, market-validated fintech companies that participate in the program.
Cirrus Secure CEO David Brooks said, “The FIS Accelerator positioned us to build a high-quality relationship with key leaders inside FIS. This team has connected us directly with numerous new bank customers, helping to validate our existing platform while providing direction for future development.”
With a portfolio of 60 companies, the FIS Impact Ventures Fintech Accelerator continues to innovate and is looking forward to introducing the next wave of partner fintechs in 2022. The 16-week program will kick off July 27 and will culminate in Demo Day on October 26 in Little Rock, Arkansas.