Over recent years, accelerator programmes and incubator hubs have been rapidly springing up around the country, as both the public and private sector seeks ways to help nurture the UK’s growing collective of startups. By offering young companies an environment for collaboration and mentorship, these varying schemes encourage disruptive startups to fulfil their growth potential by supporting their development and long-term scale-up.
According to Nesta, there are 205 incubators and 163 accelerators across the UK that offer support to a combined 7,100 businesses each year. What’s more, together they currently facilitate £33 million in annual startup investment.
My company has experienced the benefit of these initiatives first hand; GoKart graduated from Just Eat’s first ever FoodTech accelerator programme in 2017, which gave the business a platform to grow and some initial investment. This, in turn, lead to GoKart raising over half a million pounds worth of equity funding and the on-boarding of investors including a Lord from the House of Lords; the founder and CEO of London restaurant chain Tossed; former chairmen of Barclays, Credit Suisse and Morgan Stanley; and the founder and former CEO of the UK’s largest food procurement company PSL.
For startups and early-stage companies, there are huge advantages on offer for those willing and able to get involved in the various incubator and accelerator programmes on offer in the UK. But how can young businesses take advantage of them? Based on GoKart’s own experience with an accelerator program, there are some useful points for entrepreneurs to keep in mind.
Accelerator v. incubator – which one is right for your startup?
The terms ‘accelerator’ and ‘incubator’ are often grouped together, but it is important to recognise that there exists a significant distinction between both of them.
Incubator programmes are geared towards startups that have just launched or are in the very early stages of the business cycle. These startups typically have a clear product/service along with the workings of a business plan, but have not effectively transformed their offering into a functioning business. Incubators are not concerned by how fast a company can grow; instead, these hubs support young startups by helping them lay down the basic foundations for their business to develop; this is achieved through support and mentorship as well as the provision of financial and technical services.
Accelerator programmes, on the other hand, exist to advance the growth of established young companies who already have a functioning business model in place. The companies that usually apply for accelerators have already raised finance through pre-Seed and Seed funding rounds, and are generally looking for investment and expertise to support their growth. To successfully become part of an accelerator programme, startups need to demonstrate that they are scalable, attractive to potential investors, and able to rapidly expand.
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Opening new doors
Both types of programme offer significant opportunities for collaboration and mentorship; however, they are clearly geared towards startups at different stages of the business cycle. Incubators generally run for over 12 months, while accelerator programmes typically last for four months or less.
For accelerator programmes in particular, the opportunity to access a network of investors keen to back entrepreneurs can be extremely worthwhile. As mentioned, following GoKart’s involvement in Just Eat’s accelerator program, we successfully secured equity, and as a result, now have access to a seasoned group of investors on hand to offer support, guidance and also valuable introductions. This makes the application process extremely competitive, with startups needing to demonstrate scalability and the ability to innovate and grow.
Looking beyond the capital
London may be globally renowned for its thriving entrepreneurial ecosystem, but it is important for businesses to recognise that incubator and accelerator programmes are not only based in the capital. In fact, a 2017 report by Nesta found a general trend for more of these initiatives being established outside of London, particularly in cities such as Birmingham, Bristol and Manchester – places that have their own rapidly expanding communities of innovative startups.
What we are seeing in particular are tertiary institutions such as Birmingham actively embracing the UK’s bustling startup culture, offering a hub for research and innovation, not to mention access to a workforce of young skilled workers. Take, for example, the University of Birmingham: in April, the university announced its intention to lead an integrated system of incubators and accelerators to drive coordinated economic growth across the Midlands, supported by a £5 million award.
With the UK Government actively looking to support young UK businesses, initiatives such as this offer real opportunities for regional startups. For this reason, entrepreneurs based outside of the capital should not feel they have to look far to access support programmes.
Embracing the opportunities on offer
There’s never been a better time to launch a startup in the UK. With the backing of numerous industry initiatives and targeted government support, it is difficult not to be inspired by the growing number of startups popping up across the country. However, to make sure they are adequately positioned to meet their full growth potential, they should not overlook the advantages on offer from accelerator and incubator programmes – it would be positive to see the number of such schemes increase in the months and years ahead.
Anx Patel is the CEO and founder of GoKart, an app that enables restaurants to order ingredients from suppliers.