Beyond the accelerator model: Alternative support for start-ups
Accelerators aren’t the only programmes offering start-ups access to space, expertise, and contacts. Hiscox highlights other professional business support available
There are 163 accelerators in Britain and the hype around them feels like they’re now the go-to destination for budding start-ups. But could an alternative type of business support be a better fit?
Businesses that enter accelerators often have a very specific end goal in mind. They’ve got their minimum viable product (MVP), their brand identity and they enter an accelerator programme for the fast-track mentoring that will transport their business from start-up to profitable enterprise in the quickest possible time.
Yet not all start-ups follow this trajectory. They may lack the enviable growth plan demanded of accelerator entrants or the time or funds to completely relocate to a start-up hub like London for three to six months.
However, professional support is still realistic and achievable for businesses that don’t fit the accelerator-ready mould.
In fact, business support programmes can, like many alternatives, provide access to the office space, expertise and key ingredients of success now considered the preserve of accelerator start-ups. All without costing start-ups the equivalent time, money or equity.
Networking and expertise
It’s a common misconception that accelerators are the only programmes of their kind to offer exclusive access to key contacts within the start-up industry.
Alternative programmes, particularly university and research-based business programmes, have the potential to offer much richer academic expertise to start-ups, as well as direct access to the business community.
“The University of York’s Research and Enterprise Office organises ‘knowledge transfer partnerships,’” explains Tracey Smith, CEO of York Science Park, a business development space for start-ups. “These are joint projects set up between academics, high-calibre graduates and companies. Companies can then access academics and apply their knowledge to developing solutions to real-world problems.”
As well as academic-level expertise, many business support programmes also offer start-ups the opportunity to network with their contacts in the industry, and connect with developed businesses in the local community.
There is also the assumption that start-ups involved in an accelerator work alongside the brightest minds in the business, since the most notable accelerators choose only a small percentage of the most eligible start-ups who apply.
Accelerator candidates face a ruthless application stage, involving many rounds of presentation, appraisal and interview. But, given the narrow selection process, accelerator start-ups are potentially missing out on opportunities for wider collaboration.
Alternative business support programmes can give start-ups the opportunity to work with a greater cross-section of the business community and build on these knowledge relationships over the longer term.
“There are people I go to for advice about writing, marketing, websites, access to funding – you name it,” says Andy Jones, learning director of Honeyboot & Lemon, and member of the Hiscox Business Club, a growth space for young businesses. “I think this is what the Business Club is about – small businesses helping each other out, sometimes with advice, sometimes with a listening ear – and even by going out of our way to help each other out of a hole.”
Hiscox Business Club Manager, Ian Davidson, feels this diverse collaborative environment is key to building valuable and lasting support networks between start-ups.
“We’ve broadened the scope of organisations we accept. Our businesses come from completely different walks of life and their experiences are equally valid. This brings in a diversity of views and conversations and brings about a style of ‘group think’ that challenges the monoculture which sometimes exists within accelerators.”
Perhaps more importantly, Davidson points out, is the fact that businesses within alternative support programmes aren’t working alongside their direct competitors for similar funding opportunities:
“Without the competition, these programmes are potentially more open to proper collaboration.”
Growth and investment
Despite their remit for producing fast-paced scale-ups, accelerators aren’t the only institutions capable of equipping start-ups for growth. Over the 2014/15 term, York Science Park reported that 89% of its residents experienced growth. This compares to 33% of small and medium enterprises in the UK overall who reported growth of any kind.
Achieving growth in the early stages is crucial for start-ups, and even those in top programmes can suffer from the post-accelerator drop-off in activity.
Where alternative business programmes excel is in their ability to provide long term access to the facilities, expertise and business networks that are so important throughout the early stages of business.
Incubators, for example, play an important role in offering ongoing support to new businesses. Providing between one and five years of business support through access to training and facilities on either a rental or non-profit basis, incubators offer a less intensive, less competitive environment – focused on longer term support.
While accelerators prep their start-ups for funding, these opportunities aren’t completely off the table for businesses in alternative programmes either. The Research and Enterprise Department of the University of York alone awarded over £82,000 in EU grants to residents of the Science Park over the 2014/15 term, and continues to offer access to research and funding opportunities to resident businesses.
The chances of success
In the UK, the average survival rate for small and medium enterprises after five years is just 41%, according to research from the Office of National Statistics.
This is partly the reason why so many start-ups consider giving away equity in exchange for professional support. But should start-ups be so quick to sacrifice part of a business they’ve spent tireless hours building?
Entrepreneurial Spark, one of the UK’s leading free start-up accelerators, reports that over 80% of the 1,700 start-ups and scale-ups it has helped are still in business. Residents of York Science Park produced an equally impressive five-year survival statistic of 80%. And that’s without either programme’s participants relinquishing equity.
However, when it comes to choosing a business support programme, it’s important to remember that none can guarantee success. Start-ups can still fail, even if they go through an accelerator.
When deciding which route to take, start-ups need to evaluate how they operate and weigh up the kind of support that would specifically benefit their business before making any compromises. What start-ups are willing to give up must be worth what they’ll get in return.
Hiscox insures small businesses and knows the challenges start-ups face in today’s unpredictable business climate. To help new businesses navigate the early days, it has sourced expert advice for start-ups in its complete guide to starting a business.