Whither the Startup Factories? Bethnal Green Ventures, an early social enterprise accelerator, sees plenty of opportunities (- more than it can handle at present); it draws more widely, it is constantly refining its programme, it offers more support, and over a longer period, and now has follow-on funding available.
Bethnal Green Ventures (BGV), the first Startup Factory specialising in environmental and social problems in the UK, now runs two 12-week full-time programmes a year, each cohort of approximately ten ‘tech for good’ startups.
It helps run what it calls a ‘meetup group’ – of over 8,000 people – in London and other locations, through whom it gets around 200 applicants for every new cohort. 40 of these go through to interview before the final 10 are chosen. Key selection criteria include the potential for a positive impact and the motivation of founders. Those selected are offered £20k and make 6% of their equity over to BGV.
In their three months, they will come up with a plan to exploit their idea (many are about the NHS; and now energy too), a plan that can withstand scrutiny and will achieve the numbers they envisage (BGV is often able to help them find their potential customers; as it is to help them find impact investors, though the sector does not yet have enough potential investors who understand the sector. (BGV is looking to start a fund for individual investors; and another for institutional funds)).
It has funded 113 startups since it opened its doors in 2012 (its founding partners were Nesta and the Nominet Trust now called the Social Tech Trust), of which around 60 are still active but Paul Miller, its architect, reckons that perhaps 1 in 20 might achieve an exit value in excess of £50mn, and that a cohort will lose 50% of its remaining businesses every two years. [No doubt many of those involved will have gone on to play roles in other social enterprises.]
Many accelerators have been drawn, by virtue of the focus of VC funders onto exits, to prefer small businesses that are near to market, and to focus increasingly on after-care (leaving space for new pre-accelerator programmes and part-time ‘injection’ programmes.) Where Techstars now offers ‘graduates’ a substantial sum in the form of a convertible loan, BGV is now able to offer up to £50k of investment (alongside angels).
Of its 8 staff, 2 deal with sourcing startups and communications, 4 support the growth of the startups in each cohort and are responsible for investment and helping teams to find the funding they need for their continued growth and 2 look after the operations of the organisation.
BGV sees its model as working well; its investments as rising in value; but also that it is missing opportunities because of a shortage of capital to invest. And it is seeking a new home – probably in a co-working space in east London.
John Whatmore, March 2019