Startup Accelerator Programmes: A practice guide

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STARTUP ACCELERATOR PROGRAMMES A Practice Guide

Acknowledgements This guide was produced by the Innovation Skills team in collaboration with the Policy and Research team. It draws on Nesta’s reports – specifically The Startup Factories written by Kirsten Bound and Paul Miller, and Good Incubation written by Jessica Stacey and Paul Miller – as well as Nesta’s practical experience supporting the startup and accelerator community in Europe. Thanks to Kate Walters, Jessica Stacey, Christopher Haley and Isobel Roberts, who all contributed to the content, and to Kirsten Bound, Brenton Caffin, Bas Leurs, Theo Keane, Sara Rizk and Simon Morrison who all provided valuable feedback along the way.

Nesta’s Practice Guides This guide is part of a series of Practice Guides developed by Nesta’s Innovation Skills team. The guides have been designed to help you to learn about innovation methods and approaches and put them into practice in your work. For further information, contact [email protected]

Nesta is an innovation charity with a mission to help people and organisations bring great ideas to life. We are dedicated to supporting ideas that can help improve all our lives, with activities ranging from early–stage investment to in–depth research and practical programmes. Nesta is a registered charity in England and Wales with company number 7706036 and charity number 1144091. Registered as a charity in Scotland number SCO42833. Registered office: 1 Plough Place, London, EC4A 1DE.

www.nesta.org.uk

©Nesta 2014

STARTUP ACCELERATOR PROGRAMMES A Practice Guide CONTENTS INTRODUCTION

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SECTION A: WHAT IS AN ACCELERATOR PROGRAMME? 6 SECTION B: WHY CONSIDER AN ACCELERATOR PROGRAMME? 12 SECTION C: SETTING UP AND RUNNING AN ACCELERATOR PROGRAMME 15 1. 2. 3. 4. 5. 6. 7. 8. 9.

Defining your mission Choosing a specialism Designing your funding structure Attracting startup talent Selecting your startups Developing a programme package Accessing customer and investor networks Building an alumni service and post–programme support Measuring and evaluating performance Worksheet

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FURTHER READING AND RESOURCES

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ENDNOTES

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STARTUP ACCELERATOR PROGRAMMES A Practice Guide

INTRODUCTION

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n 2005 a new way of supporting startups was born with the launch of Y Combinator in Cambridge, Massachusetts. The first accelerator programme of its kind, it invested in a small batch of promising startups – including Reddit and mobile location startup Loopt, which sold for $43.4 million in 2012. Using a lean startup approach, it worked intensively with them for three months to prepare them for pitching to an invite–only audience of venture capitalists. Less than ten years later, and this model has been replicated, adapted and developed by accelerator programmes the world over. The largest – such as Silicon Valley’s 500 Startups, and US and London–based Techstars – are able to pick from thousands of entrepreneurs and founding teams, all vying to gain the advantages their programmes can provide. Many more are also on the look–out for the next big thing, and a new wave of programmes – known as impact accelerators – are using the model in order to find startups with the promise of social as well as financial return. This explosion of startup accelerator programmes is not altogether surprising. Advances in digital technology have led to huge decreases in the cost of launching a business, and the corresponding increase in startups means that developing effective ways of incubating early– stage businesses is more relevant than ever. At the same time, the decrease in startup costs has created the opportunity to invest much smaller amounts of money than previously.

There have been some huge successes among accelerated businesses, including household names such as AirBnB and Dropbox – both