Stadia Ventures has paused running its own startup accelerator program as it shifts to providing innovation services for companies.
The St. Louis-based venture capital firm has created a new business segment co-founder Art Chou said involves providing “innovation as a service” for clients in the sports industry. It has started to work with multiple clients, including Baltimore-based apparel brand Under Armour, Tokyo-based Nippon Telegraph and Telephone Corp. and nonprofit Mitre.
As it builds out its innovation services offering, Stadia currently isn’t staging its own accelerator program that invests in sports-focused startups. Chou said it’s possible Stadia could continue to offer its accelerator program in the future, but there are no concrete plans currently. However, Chou said Stadia will continue to stage accelerator programs as it currently is planning such programs for corporate innovation clients.
Stadia, which launched in 2015, has invested in 78 startups and last staged its accelerator program in spring 2023.
Chou said Stadia’s services business builds on what he believes it did best as an accelerator program in creating an innovation funnel that brought together startups; sports teams and organizations that helped pick investments; and industry experts who mentored its portfolio companies. He said the “innovation as a service” model comes as clients have said they want Stadia to bring its network and innovation sourcing capabilities directly to their organizations.
“That’s what we’re going to do. There’s a lot of opportunities for that,” Chou said. “The challenge for us is how does this not just become a consulting business. It’s in none of our long-term interests to be consultants 10 years from now.”
The services model complements the accelerator approach in that Stadia still wants to find startup companies and help them with business development opportunities and investment, Chou said.
“It’s still finding the winners,” he said.
Stadia generates revenue through a fee-based model for its innovation services, as opposed to receiving management fees through the venture fund that provided investments for its accelerator program. Chou said Stadia’s investment funds are still actively managing investments made to its accelerator companies and continue to generate management fees through those operations.
Chou said Stadia is currently working with three to five clients in its “innovation as a service” business. With those clients, Chou said Stadia essentially acts as an innovation department for hire. He said relationships can include helping clients get into new innovation and technology-focused areas of business and involve running accelerator programs for clients. He said it’s possible Stadia’s work with clients could lead to investments in startups that work with its clients. Chou said Stadia continues to have an active venture fund, but said it’s to be determined if it will make startup investments itself in the future. He said it could partner with other funds to provide investment to companies in the future. Stadia could also receive “sweat” equity in companies in exchange for its business development assistance, Chou said.
Key to building out Stadia’s innovation services segment is determining how it wants to grow and the extent of its relationship with customers, Chou said.
“We’re trying to feel our way out in terms of how deep and how big does it become. How much do they want us to do versus setting it up and handing it off to them,” he said.
While Stadia has backed dozens of companies through its accelerator program, Chou said its innovation services approach fits the skills of its team better than investment fund management, saying that was a skill Stadia had to learn as it operated.
“What we do know is the business development side of developing technologies and developing companies,” Chou said.
