Trends and insights into Good Incubation

In the last five years we’ve seen the number of social venture incubation programmes grow to over 230 programmes worldwide. Our new report, Good Incubation, charts the rise of social venture incubation, with a focus on what can be learned by this burgeoning sector from programmes around the world.

Social ventures are increasingly seen as an important way of solving the social and environmental challenges of our age. The world of social impact investment has developed to finance and support these ventures, once they have shown that they can be successful both financially and in terms of their impact. 

While the impact investment market is estimated to be worth £202m in the UK, there is a gap between early-stage social ventures and the later stage investment that is increasingly available. In part, the rise of social venture incubation is a response to this gap in the social investment pipeline, helping ventures to prove an idea, develop a team and accelerate their progress before accessing more substantial finance.

In partnership with Paul Miller from Bethnal Green Ventures, we interviewed over 20 managers and advisers to social venture incubation programmes from around the world as well as founders of ventures supported by those programmes, undertaken in 2013 and 2014. We also visited programmes to see first-hand some of the techniques they use.

We found that there are five models that have emerged to support early stage social ventures:

  1. Co-working spaces - offering work space and opportunities for founders to access co-founders, networks and increasingly training;
  2. Social venture academies - offer training for social venture founders and access to mentoring;
  3. Impact accelerators - offer finance, training, access to networks and usually office space;
  4. Social venture prizes and competitions - offer finance, profile, mentoring and often access to expertise and staff of larger organisations;
  5. Impact angel investor networks - offer finance, mentoring and access to growth expertise.

As a field, social incubation is still very young, with most programmes being less than five years old. However, during our research we noticed several distinct trends:

  • Vertical specialisation – more programmes specialising in a particular industry or social or environmental problem, such as health or energy saving technologies.
  • Domain specialisation – more programmes specialising in a particular expertise, for example by having world-beating design expertise in-house that is able to push forward ventures in a particular way.
  • Educating customers and investors – many programmes are finding that it’s not enough to open up access to customers and investors for their teams, they need to educate these investors and customers on how to work with startups.
  • Diversification - some incubators are expanding into other geographic areas, or diversifying their offering to support ventures at different stages of their scaling journey.
  • Opening up data - as programmes develop track records, they are making more data public about their performance which enables founders and investors to make comparisons. However there is still no agreed framework for measuring the performance or impact of incubation programmes. There are a number of academic studies looking into this area, but as yet none have had enough time or volume of ventures to track to collect meaningful data.

Through our research and our own observations, we’ve identified a number of clear lessons for programme managers, investors and policy makers involved in developing the impact investment ecosystem. The recommendations in the report include:

  • Develop a better understanding of the business models of incubation.
  • Help incubators standardise their impact metrics.
  • Create better ways to help founders choose the right programme.
  • Help close the post-incubation gap.

Good Incubation is an attempt to cover some of the lessons learned by programmes around the world and share those with the growing UK social incubation sector. We recognise that this report is just a start and there’s a need to develop insights based on robust evidence of what works, and to create opportunities for programmes to come together and share. We hope that there will be a willingness to develop this over the coming years.

Download the report.

Contact the authors: @rellimlaup @JessStacey