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The Startup Factories

This report explores the impact of accelerator programmes, as part of a broader effort to understand how better to support innovative start-ups.

This report explores the impact of accelerator programmes, as part of a broader effort to understand how better to support innovative start-ups.

Key findings

  • The number of accelerator programmes has grown rapidly in the US recently, and looks likely to grow in Europe. These programmes are notable for the high quality of mentors and start-up teams they work with and the value they add to companies.
  • Demand for accelerator programmes outstrips supply. Limits on their growth include the pool of high quality mentors, opportunities for acquisition by large companies or stock market flotation and competition for start-up talent with other careers.
  • There are four areas for further research and debate: How should we track this trend and measure the wider impact of accelerators? How can accelerator programmes be improved even further for founders? How many accelerators could there be? Could accelerator programmes work in other sectors?

Over the past six years, a new method of incubating technology start-ups has emerged, driven by investors and successful tech entrepreneurs: the accelerator programme. 

 

The accelerator programme model comprises five main features which set it apart from other approaches to investment or business incubation: 

  • An application process that is open to all, yet highly competitive. 
  • Provision of pre-seed investment, usually in exchange for equity.
  • A focus on small teams, not individual founders.
  • Time-limited support comprising programmed events and intensive mentoring. 
  • Cohorts or ‘classes’ of start-ups rather than individual companies.

Early evidence suggests such programmes have a positive impact on founders, helping them learn rapidly, create powerful networks and become better entrepreneurs.

 

Despite growing interest in the model from the investment, business education and policy communities, there have been few attempts at formal analysis. 

 

Authors

Paul Miller and Kirsten Bound

 

Authors

Kirsten Bound

Kirsten Bound

Kirsten Bound

Executive Director of Research, Analysis and Policy

Kirsten is an Executive Director at Nesta and leads Nesta’s Research, Analysis and Policy team.

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