The UK is experiencing an accelerator boom

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Francois Badenhorst
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A new report from the innovation foundation NESTA has identified 205 incubators and 163 accelerators currently active in the UK, considerably more than previously estimated.

Altogether, the UK’s burgeoning startup support ecosystem help around 3,450 and 3,660 new businesses per year.

The number of accelerators, in particular, has grown at an impressive clip. Of the 163 accelerators in Nesta’s database, only a handful existed at the beginning of 2012.

This growing network now delivers around £33m of investment into startups per year. And this growth shows no sign of abating: last year saw 45 new accelerators created.

If this rate continues, accelerators are on course to overtake the number of incubators in the UK within the next year-and-a-half. (Traditionally speaking, incubators focus on providing workspace and have a stronger sectoral focus; accelerators are growth and finance focused).

Nesta’s report challenges the received wisdom that accelerators are just feeder programmes to incubators.

Nesta’s research shows the spike in the number of accelerators has been fuelled by corporate money. Sixty-five percent of accelerators created since 2014 are funded by corporates, compared with only 29% of accelerators created before 2014.

“It is interesting to see increasing levels of corporate involvement in accelerators,” Chris Haley, Nesta’s head of startup research said in a comment. “Large companies have many different resources which can be of value to startups, including mentoring, industry insight and routes to market.”

The report notes that an increasing number of incubators and accelerators receive public or university funding - although accelerators are, as a whole, less dependent than incubators on these sources.

Accelerators are, however, still largely concentrated in London. Incubators, on the other hand, are more evenly spread across the country. This is starting to change, though, with accelerators spreading their reach to Birmingham, Manchester, Bristol and Cambridge.

Not just feeder programmes

Nesta’s report challenges the received wisdom that accelerators are just feeder programmes to incubators.

Instead, accelerators have emerged as alternatives, rather than just precursors, to incubators. Increasingly, accelerators are providing support designed for more established and high-growth companies looking to scale up their business.

Seedcamp. identified in the report as the UK's first true accelerator, acknowledges this change, too. In fact, Seedcamp isn't an accelerator any longer - at least not in the traditional sense.

“We moved away from acceleration and just focusing on the early stage with the launch of our third fund in 2014," explains Seedcamp's Reshma Sohoni, founding partner, at Seedcamp. . "The standard approach to acceleration made sense when we started but, with time and the evolution of the startup ecosystem, we definitely felt the accelerator model was in need of evolution too.

"We don't run any sort of program and we invest all year round, so there's no batch investment or cohorts. We focus strongly on the lifelong support and deep network we provide to companies, on top of just cash. We'll also follow on in rounds and invest larger cheques into companies than we did at the start."

Accelerators are, however, still largely concentrated in London.

Analysing the report, the main difference between accelerators and incubators now seems to be in emphasis rather than the developmental stage of the business.

As a general rule, the report says incubators tend to provide workspace and are more likely to focus on the STEM (science, tech, engineering and medicine) sector.

They also tend to be oriented toward local environments, with incubator participants travelling a shorter distance to participate compared to accelerators.

According to Nesta’s Haley, the report is intended to map the “the landscape of existing startup support, including accelerators and incubators” and to “help entrepreneurs find assistance”.

They exist - but do they work?

The report delves into the regional and sectoral affiliations of the UK’s incubators and accelerators - but it’s reticent to comment on their effectivity.

It’s a point that Haley also acknowledges. “Our focus was specifically on mapping the programmes in order to identify geographic and sectoral gaps - which we think is of value in itself, both to entrepreneurs and policymakers, but appreciate it is only a first step.

“The question of whether they work is a very important one; although the report did reference some of the growing body of evidence that accelerators and incubators do indeed add value, we agree that more needs to be done to understand better which specific activities add value to what types of company.”

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