Highly selective, accelerator programmes provide intensive and time-limited startup support
They aim to support startups with growth potential, typically helping them to become investment ready in a short time. Nesta has invested in early accelerator programmes, built peer support networks among operators and does leading research on how to make them more effective.
Accelerators as an innovation method
Accelerators are designed to support startups with growth potential, helping them to scale quickly and (typically) become investment ready.
Startups are an important means by which new ideas are brought to life. However, young ventures can face a number of challenges and hurdles when they start out. Accelerators aim to improve their chances of ultimate success by providing a variety of services.
The accelerator model has some typical features which set it apart from other approaches to startup investment or business incubation – these include:
- A highly selective admissions process
- A focus on cohorts or ‘classes’ of startups rather than individual companies
- Mentoring or other business training
- Intense and time-limited support, usually lasting between three and twelve months.
They may be funded by VC investors, public bodies or large corporates, depending on structure and objective. They also often tend to focus on supporting technology-based and/or digital startups.
As an innovation method, accelerators present an exciting opportunity to learn about supporting entrepreneurs and emerging businesses. It is a continually evolving space.
Our work on accelerators
Nesta made early investments in a range of accelerators and incubators - from Seedcamp to Springboard, from the European Microelectronics Academy to Design London.
We became interested in the emerging trend in accelerator programmes in 2010 as a potentially low cost and high impact way to support startups and develop entrepreneurs. We have now studied accelerators for a number of years, working to improve awareness and understanding of their impact and what makes them successful.
Our research began in 2011 with a report ‘The Startup Factories’, which charted the rise of accelerator programmes to support new technology ventures in the US and Europe. This report was a first step towards a more informed critique of the phenomenon of accelerators.
As a follow up to the Startup Factories we created the first ever map of accelerator programmes across Europe. Alongside this we started to analyse the evidence of effectiveness in the wider incubation community with Incubation for Growth.
We are dedicated to understanding how to improve targeted incubation and acceleration for social impact ventures. Nesta was an early investor in and host of Bethnal Green Ventures - now one of the world’s leading tech for good accelerator programmes. We have analysed the emerging trend in social impact accelerator programmes in Good Incubation and explored the trend around the world - for instance with Good Incubation in India.
We have continued to monitor this rapidly developing landscape. Our 2015 report A Look Inside Accelerators sets how accelerators could be grouped by type: as ecosystem builders, investors or matchmakers. In turn, Startup Programmes: What's The Difference (2015) explains how accelerator programmes differ in how they make money and when they intervene in the startup journey.
Nesta also works actively with policymakers to help guide their thinking around the role of accelerators within a mix of publicly-funded business support mechanisms. In 2017, a collaboration with the UK’s Department of Business, Energy and Industrial Strategy (BEIS) resulted in the creation of a directory mapping all accelerator and incubator activity in Britain. Business Incubators and Accelerators: the National Picture identifies where these programmes are located throughout the UK and what sectors they focus on.
Nesta is also one of several founding partners in the Accelerator Assembly, which is working to build a network of accelerators in Europe. Part of the European Commission's Startup Europe initiative, it aims to not only create new research and share information, but also improve the transparency about programmes.
We never work alone and, in the last 10 years, we have partnered with the Cabinet Office, the Open University, the London School of Economics, Imperial College and the UK Science Parks Association, amongst many others, to further illuminate the field of accelerators.
Nesta’s ongoing research aims to give us a richer understanding of their effectiveness, help programme managers to evaluate and report their impact to funders, and also help policymakers decide between different potential interventions available to help emerging startups to thrive.
One of the world’s earliest accelerators, which is often credited as having sparked the wider accelerator movement, is the California-based Y Combinator. This programme provides advice, access to networks and seed funding, in exchange for an equity stake (typically $120k for 7 per cent). It has helped to develop more than 1400 technology companies, including many now-familiar firms such as Dropbox, Airbnb, Coinbase, and Reddit. As of June 2017, the combined valuation of Y Combinator ‘graduates’ was estimated at over $80B. This accelerator has set the benchmark for others and has informed a lot of Nesta’s work in the field.
This practice guide (2014) was produced by Nesta as a manual for prospective accelerators managers, and built upon research which we had undertaken previously, as well as work commissioned from Imperial College and from Cambridge University / St John’s Innovation Centre. Using examples, it explains how accelerator programmes work and includes resources to help the reader think about setting up their own programme.
Nesta’s Digital R&D Fund for the Arts (2012-2015) supported ideas that use digital technology to build new business models and enhance audience reach for organisations with arts projects. When the programme ended, a number of those participating secured further funding support to develop their proposals more. However, it was clear that a significant number of the projects involved would benefit from support and investment beyond their R&D phase, to help them fully realise their product or service.
To address this, Nesta and Arts Council England partnered to launch an accelerator programme (2016) designed specifically to help projects become ‘investment ready’ with the aim of attracting new forms of finance beyond traditional routes. The accelerator took the form of a three-month programme of business support to help projects explore the further potential of their original ideas. This one-off initiative allowed both partners to test how the accelerator model, which is now common in other sectors of business innovation, might work for the arts and cultural sector more generally.
Nesta tools and resources
- Business incubators and accelerators: the national picture (report) (2017)
- Good Incubation in India (report) (2016)
- A Look inside Accelerators (report) (2015)
- Startup support programmes: What's the difference? (report) (2015)
- Startup Accelerator Programmes: A practice guide (report) (2014)
- Good Incubation (report) (2014)
- Incubation for Growth (report) (2011)
- The Startup Factories (report) (2011)