Assessing the impact of incubators and accelerators
Assessing the impact of incubators and accelerators
We are now six months into a study exploring the impact of incubators and accelerators in the UK. Over this time, we have held several roundtable discussions and surveyed over 100 incubators and accelerators and we are now ready to begin the second phase of the project.
The study, conducted in collaboration with BEIS, the Open University, the London School of Economics and the data provider Beauhurst, aims to give us a richer understanding of the effectiveness of incubators and accelerators in the UK by quantifying their impact on the performance of participating startups as well as their broader impact within the startup ecosystem.
We also aim to investigate which types of support (e.g. provision of workspace, mentoring, funding or training) add the most value.
At the end of last year we held roundtable events for incubator and accelerator programmes to discuss their activities, how they measure their impact and what barriers they face in supporting startups. These discussions highlighted:
- The majority of incubators and accelerators do very little to measure their impact (due to lack of capacity not want for evidence!)
- Those that do measure their impact typically do so through qualitative surveys during the time the ventures are taking part in their programme. If they do use quantitative measures, such as growth or investment, they do not compare these to a control group.
- Some incubators suggested that only analysing the impact of their support on a venture’s growth or investment could lead to bad incentives and that more holistic measures may be more relevant.
- The key challenges faced by accelerators were financial sustainability of their programme, attracting investors and providing valuable post-accelerator support.
- All agreed that more could be done by the public sector to support them e.g. additional financing, prioritising entrepreneurship education and skills, facilitating introduction of products and services to the market.
We also held roundtable events with startups that had taken part in either an accelerator or incubator to discuss what barriers they were facing and how accelerators helped them overcome these:
- Accelerated startups consistently highlighted that mentorship was the most valuable part of the programme in which they took part. However it was also highlighted that in order to be useful, mentors need to have significant industry-specific knowledge and connections within the industry or have extensive experience in setting up businesses themselves.
- Incubated startups on the other hand found most value in having access to work space. Some said that as they already had experience running a business, the other support offered (e.g. training and workshops) was not tailored enough to their needs and so could be more of a distraction than a help.
- Both accelerated and incubated startups saw considerable value in the introductions and connections that their hosts can facilitate.
- They also highlighted that there was sometimes a lack of post-participation support from accelerators and particularly that more support was needed during the scaling up process.
These roundtable discussions helped inform a subsequent survey of accelerators and incubators. In total, we surveyed over 100 incubators and accelerators. A preliminary analysis of the survey responses has raised several useful insights.
For example, as shown in previous Nesta work, nearly half of the incubators and accelerators revealed that they were at least partially funded by public money. This stresses the importance of finding out how effective these initiatives are to policymakers as well as the organisations running the programmes themselves.
Moreover, when we asked incubators and accelerators which of the potential benefits they regarded as being the most important, there were a number of interesting differences between the two groups of respondents. Incubators consistently ranked ‘business skills development’ as being much more important than accelerators did. Whereas, accelerators were nearly twice as likely to rank ‘connections to potential partners and customers’ as being one of the most important benefits.
Our survey also produced interesting distinctions between incubators and accelerators with regards to their programme goals. On the one hand, incubators rated local economic development as a far more important goal than accelerators, which can be related to the higher rate of local startups found working in incubators. On the other hand, accelerators were significantly more likely to rate generating a financial return for owners or investors as important, which relates to the greater proportion of privately funded accelerator programmes.
To further quantify the impact of existing programmes, both on startups and the wider ecosystem, we have created a survey to be completed by ventures. This survey of ventures that have applied to accelerators and incubators (both those that participated and those that were not accepted) will collect information about their progress since applying (in terms of growth, innovation and furthering their social mission).
This will allow us to compare the progress of those that have participated in an accelerator or incubator programme with those that have not.
However, we can not do this alone and need the help of UK accelerators and incubators.
If you work for a UK accelerator or incubator and would like to assist this project, please do get in touch ([email protected]). By contributing, you will not only gain evidence of your programme’s impact, but also help the sector as a whole.
The findings of this study will be made publicly available in a report published in September 2018. If you have additional questions about the research, please contact us at: [email protected]