In the UK it is estimated that around 80 universities run innovation incubators or accelerators.
Although often conflated, incubators and accelerators are different. An incubator is effectively a real estate offering, where spin-out and start-up companies can rent office or lab space within onsite business support. An accelerator is typically a fixed term cohort-based programme for companies that provides education, mentorship, and access to networks, including investors.
An article in the Harvard Business Review summarised the accelerator experience as “a process of intense, rapid, and immersive education aimed at accelerating the life cycle of young innovative companies, compressing years’ worth of learning-by-doing into just a few months.”
Models
The term “accelerator” can be dated back to the founding of the Y Combinator in 2005 in Boston. The Y Combinator created a new model for funding early-stage startups. In exchange for equity, Y Combinator would help start-up and scale-up companies through investment, training, mentorships and accessing networks. Today Y Combinator has supported over 4000 companies with a combined valuation of US$60bn, including supporting household names such as Airbnb, Dropbox and Coinbase.
Since Y Combinator, different business models for accelerators have evolved including a “fee for service” offering. It is this model that typically is found in universities although the “fee” may not be visible to the entrepreneurs. This is because the university may be funding the accelerator directly, or more likely through a grant or donation it has received.
A recent study from Alberta has looked at the effectiveness of an accelerator programme on its progress to impact and offers a number of lessons for universities who wish to support the startup and scaleup of companies founded by staff and students.
Critical findings include how accelerators contribute to the “entrepreneurial capital” of a region generating local impact for its communities. This framing is particularly relevant to UK universities as it moves away from hard financial metrics to ones that embrace universities’ broader social purpose and civic responsibilities.
And it is particularly important now during an election period where parties are wrestling with how to support devolved research and innovation policy.
Methods and regions
The Alberta Innovates Scaleup and Growth Accelerator Program invested C$35m (around £20m) in supporting two pre-accelerators (aimed at early-stage companies), and four different accelerator models (agnostic capacity building, specialised agri-food, specialised social impact, corporate partner) aimed at more matured companies.
Building on previous work looking at regional innovation networks, summarised on Wonkhe, a realist approach was adopted. In other words, the assessment sought to understand how and why the programme causes or contributes to the desired outcome (of job creation and economic growth) and, critically, capturing issues such as relational power, trust and community effects.
The overall conclusion of the impact assessment was that the Scaleup and Growth Accelerator Program was making a significant contribution to the entrepreneurial ecosystem in Alberta. On a range of “hard metrics” it had delivered. For example, 249 jobs had been created, C$58m of revenues generated and C$278m of investments raised. However, what was evident from the 100+ interviews undertaken with entrepreneurs, mentors and investors, was that the programme had contributed to the social fabric of communities in ways that were unanticipated and would have been hidden with a more traditional evaluation, therefore helping in the assessment of the ripple effect of investments and network effects.
For example, the programme had contributed to strengthening and deepening social capital within the entrepreneurial ecosystem in Alberta through a multitude of connections and introductions. It not only provided training to 574 companies but also supported the development of 154 mentors. The symbolism of the program signalled Alberta’s ambitions in innovation, opening itself up to some of the major global providers of accelerators and their associated networks.
Entrepreneurial capital
The concept of entrepreneurial capital has been debated for some time in the academic literature and captures entrepreneurial competence and commitment (human capital), networks (social capital), prestige, symbols and signals (cultural capital) and investments, funding, revenues etc (financial capital) – as illustrated below.
In the context of university accelerators it may be useful to conceptualise entrepreneurial capital as the amalgamation of financial, social, cultural and human capitals.
In this framework this mix of capitals influences the entrepreneurial journey both in a positive and negative ways. In keeping with the realist approach, the capital mix is likely to be different for different enterprises implying that it is not the size of the capitals that only matter, but also their combination. While this theory may feel somewhat removed, it does provide a framing for understanding how the Scaleup and Growth Accelerator Program worked in practice – and may be of use to university accelerators in the UK when thinking about their overall impact.
In particular, as both the Conservatives and Labour see regional R&D investment as key to growth, it is important that government, regional authorities, and universities are fluent in the kinds and size of intervention that encourage different outcomes.
