Social Enterprise Accelerators
March saw the first conference of the Accelerator Assembly Network at the BBVA Innovation Center, in Madrid. Accelerator programmes provide training and mentoring for cohorts of businesses, aiming to help the entrepreneur scale their business and become ready for investment. The model is based on pioneering examples such as Y-Combinator, which began working with technology start-ups in Silicon Valley in 2005.
There are several characteristics which are hallmarks of an accelerator model, and different accelerators will include different elements. Nesta’s 2011 report, ‘The Start Up Factories’, identified some common features. These include:
- An application process that is open to all, yet highly competitive.
- Provision of pre-seed investment, usually in exchange for equity.
- A focus on small teams, not individual founders.
- Time-limited support comprising programmed events and intensive mentoring.
- Cohorts or ‘classes’ of start-ups rather than individual companies.
In addition, programmes often culminate in a ‘demo day’ where entrepreneurs present their business to potential investors. The number of accelerators has increased steeply in recent years, but research in the area remains scarce. At the conference, Jed Christianson gave a talk presenting some of the numbers that we do have available, identifying 213 accelerators worldwide and 57 in Europe. From qualitative interviews that he had conducted with startup founders, he found that mentoring and networking opportunities were the most valuable benefits gained from attending programmes, while generic and inconsistent mentoring, and too much focus on demo day, were frequent drawbacks.
There is even less research available on accelerators which focus on social enterprises. As part of the Tepsie work that we have been doing on ‘Growing What Works’, I have been conducting some research in this area. I found that accelerators fulfil an important ‘intermediary’ role in connecting social enterprises with social finance, and their use in this sector is growing. Examples of social innovation accelerators include: GoodCompany Ventures in the American state of Pennsylvania, Hub Ventures in California, Social Impact Start in Germany, Austria and Switzerland, and the R Labs Innovation Incubator and Accelerator in South Africa. Educational institutes have caught on to the trend too, with many offering social enterprise accelerators to students and graduates, such as the Social Innovation Accelerator at the University of Sheffield.
I chose two social impact accelerators to look at in more detail: ‘The Accelerator’ run by The Young Foundation in London, and Impact8, a Canadian accelerator run by MaRS Discovery District. Both share important features, advising social enterprises on human resources, marketing and sales, policy networks, growing market share and developing systems. Entry to these programmes is highly competitive, and the support offered runs for a period of 2 months (in the case of Impact8) and 3 months (in the case of The Accelerator). Both programmes culminate in a ‘demo day’ where entrepreneurs present their business model to social investors. Participants in both programmes praised the model. They highlighted networks and mentoring as key beneficial aspects, chiming with Christianson’s research.
As the field continues to grow, questions remain. It is not clear at the moment how much value is added by having specific ‘social enterprise’ accelerators, particularly as many conventional businesses are beginning to think more seriously about maximising their social impact. Instead, it might be more fruitful to organize accelerators by field of interest, e.g. technology, health, catering, particularly as this would give the opportunity for social enterprises and conventional businesses to learn from each other. More research to demonstrate the benefits of accelerators is important, as without it entrepreneurs will question the value of investing so much time in these programme.While it is relatively simple to follow individual ventures and track the funding they received after taking part in the accelerator programme, it is important that other more indirect impacts are not overlooked. For example, it might be possible that the existence of social enterprise accelerators and the success stories that they generate may assist in the development of a more ‘entrepreneurial culture’ within the social sphere. It is still too early to know if this will be the case but it will be interesting to see the development of the field over the next few years.