Incubators have been growing fast in the UK since the 90s and Accelerators are providing them with a new tool to support the growth of young businesses, a tool which looks like having a comparable period of rapid growth (1). Their aim is to help those who take part in all kinds of incubator to develop their ideas into viable businesses or marketable propositions. While incubators provide space for young businesses, Accelerators offer a process which helps both to generate new businesses and to give young businesses a helping hand on the escalator of growth.
They are distinct are in four ways:
1. Accelerators exist for a pre-defined time: all the teams start
at the same moment, develop together, and finish together –
on Demo Day;
2. The teams (usually about a dozen at a time) are selected on
a competitive basis; and if they are aiming to start a new
venture they are often paid a small amount for the duration
of the programme and in return they give up a small percentage
of their equity;
3. Often, the teams work alongside one another, enabling them to
benefit from each other’s expertise, ideas and progress;
4. They are provided with more intensive support – of mentors,
advisers and contacts.
In the one of the most recent of Accelerators, six out of six teams at Bethnal Green Ventures managed to develop their novel concepts for social enterprises to the point where they had either positive cash-flows, or ongoing contracts, or an offer of investment.
YCombinator in Mountain View, California, opening its doors in 2005, then with 30 companies per class, now as many as 60, and Techstars, founded in 2007 with ten companies per class, and now operating in a number of locations, are perhaps the best known Accelerators in the States – among a number of others in a fast-growing scene. Techstars ‘probably created more funded companies last year than all six of the best universities [in the UK] created in their best year’, writes one leading entrepreneur.
The BBC’s Watering Holes were among the first Accelerators in the UK: one week programmes, the concept drawn from Stanford, designed to work with people who brought to the BBC ideas for new programmes, and intended to turn them into propositions that were marketable to commissioning managers. Watershed’s Pervasive Media Studio followed – a year-long programme designed to enable people in the arts to explore ways in which pervasive media might be of use in that field. Seedcamp was the next, started in 2007, a week-long programme designed to help people with ideas for new businesses to develop them to the point where they could be pitched to potential investors, a programme that was itself turned into an enterprise and sold the world over.
The Difference Engine, started in 2009, was the first classic Accelerator in the UK – a 13-week programme for a dozen people, with the same objectives as Seedcamp; followed by the similar ‘Springboard’ in 2010, run first in Cambridge, then in London, and again recently – as Springboard Mobile. Alongside these, there have been perhaps half-a-dozen others in the UK. Many of them have had funding from Nesta, the National Endowment for Science, Technology and the Arts.
In March last year, Telefonica, the first corporate to set up a ‘lab’ in which to run a continuous programme of Accelerators, opened its London lab – the tenth such Accelerator it has opened worldwide – where it will run two six-month cohorts a year. IBM’s venture capital arm is just starting one for businesses in Healthcare IT, one of some twenty IBM has run over the last two years – in various cities all over the world; and the Cabinet Office has just closed its invitation for bids for a £10mn fund for three incubators/ accelerators in social enterprise, to be run over the next three years.
These Accelerators are becoming increasingly specialised, and tailored in duration to their purposes – both to different points along the escalator of growth, and in terms of sector or technology. They are able to pick off people with the best opportunities; they flood them with support; and they manage to attract a range of potential investors for the successful teams. However they certainly entail risk, and they tend to generate small businesses whose prospects of scaling are uncertain.
One model is suggested by Biocity, a Life Sciences incubator in Nottingham, which aims to support young businesses at several stages along the escalator of growth. A number of their new businesses enter the incubator from the 3-day Bootcamp that they hold regularly; and those that emerge from this and into the incubator are then able to pitch to enter a 6-9 month accelerator-type regime in which they are provided with intensive support for developing a business plan, whose end-point is a marketable proposition – a vertically-integrated approach.
Several Accelerators have focused on helping more mature SMEs to grow by working with them eg on strategy (eg Qi3 see http://goo.gl/Od6F1), on business model (eg The Young Foundation see http://goo.gl/ET1zQ), on new concepts (eg Watershed, Bristol see http://goo.gl/XCTxK), new products (eg Plato, Belgium see http://goo.gl/hzBJ5), and new customer segments and marketing (eg Fintech Lab see http://goo.gl/a5c9A).
Another of many possible futures for Accelerators is suggested by the National Theatre’s Studio, which invites writers, directors and other
creatives in theatre for ‘residencies’, often for insightful collaborations that might prove to be the elixir for bringing some theatre piece to fruition – a more flexible approach than that of the common model of the Accelerator.
Common to all these examples is that they are an intensive phase of the development process whose management is carefully curated and adapt-ed to the needs of the particular businesses.
(1) See Nesta’s ‘The Startup Factories’, 2011
John Whatmore, 2013
Copyright John Whatmore 2012