Scaleups: some vital new signposts

Recent research suggests that specialised support programmes could facilitate the development of hi-growth SMEs

Recent research showed that the more successful teams in Accelerators tended to be existing ventures, with well qualified teams, focused on the adoption of their products/services, and on building their organisation.        Innovate UK should foster the development of programmes that support the timely and progressive changes in management practices that new research reveals distinguish the development of hi-growth SMEs.

Village Capital in New York – a not-for-profit founded in 2009 (1) – has just published research (what’s working in startup acceleration), based on its own programmes, on what makes Accelerators more effective.

The research, which compares and analyses its more successful programmes with its less successful ones, was carried out with a US university, a local network of development entrepreneurs and a consortium of public and private funders – building on a programme that works with accelerator programmes around the world.

Its main findings that are of general application are:

*       Accelerators have better results with ventures that have some initial revenues, but need to accelerate their development.

*       The high-performing programmes had smaller applicant pools on average. However, their applicants tended to have more intellectual property and more educational, entrepreneurial and senior management experiences.

*       High performing groups tended to spend more of their time out and about and less with other members of the cohort, mentors etc

*       Programmes need to focus more on building entrepreneurial networks, and less on delivering content.

*       While understanding financials is clearly necessary for investment readiness, high-performing groups focused more on presentation and communication skills and networking, and on organisation structure and design.

*       High-performing groups tended to have more mentors, but alumni were less valued as mentors than those from potential customers/users.

*       Partner groups needed to be engaged and to have a serious interest in supporting their startups.

Moreover these findings are echoed very closely in the just-published Barclays Scaleup Report (Barclays/scaleup).

This report also comments that support for hi-growth SMEs needs to be sustained and ‘heavyweight’ so as to achieve timely progressive changes in management practices as they develop and grow. Incubators – with their premises, their staff and their existing occupants – could develop specialised support programmes that do so.

John Whatmore, April 2016

(1) Village Capital’s focus is on social enterprise, and its model subverts the common approach of commercial accelerators in that it focuses first on objectives, and only then on resources. It sees capital as a resource in the service of its mission rather than as a determinant of new businesses; and puts projects and teams together on the basis of what will best achieve the social objectives it espouses, such for example as enhancing private educational facilities in Indian schools.

 

 

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