Insights
In last November’s Autumn Statement, the government highlighted ‘the innovation economy’ as a key element in its plan for prosperity and economic growth. In his New Year speech, the Prime Minister repeated this message arguing “the most powerful plan for sustainable growth is to position the UK to fully benefit from the incredible scientific and technological change the world is seeing”. New measures include the establishment of the Advanced Research and Invention Agency to support high risk-high reward research, a new framework for the manufacture of innovative medicines, and new flexibility for funding of innovative provision in the adult education budget.
Given this interest in innovation, now seems a good time to share insights from our recently updated Accelerators Toolkit.
What are accelerators?
Accelerators are business support programmes that provide short term, intensive packages of support to young firms to help them grow. The support is typically provided for three to six months, and often includes intensive mentorship sessions, as well as networking opportunities and co-working space. The application process for accelerators is usually competitive and often only a few firms are accepted into each cohort.
Accelerators have been widely used in the tech sector for some time and are increasingly used in other industries.
What impact do accelerators have?
Accelerators can have a positive impact on a range of outcomes, including securing finance, employment, and sales. However, participating in an accelerator programme can have a negative effect on firm survival. Although, this may seem like a bad thing, it could be that this is a useful function of accelerators. A lower firm survival rate may imply that participant start-ups figure out more quickly that their business is not going to work, giving them the opportunity to pull out before investing more time and resources and reorientate their efforts towards something else. These results suggest accelerators may be worth pursuing to support start-ups, even if they reduce firm survival.
One caveat is that the impact of accelerators may be different in different areas: location matters. Accelerated firms are more likely to obtain funding from local investors and accelerators have a bigger impact in areas which already have lots of entrepreneurs. The implication of this is that accelerators are more likely to be useful if they are in big, innovative cities. Places with low levels of entrepreneurship might want to pursue other interventions first.
The evidence is more limited on cost-effectiveness. For example, whilst evaluations generally find a positive effect on employment outcomes, we do not know much about how much it costs for each additional job, or how that compares to other job creation interventions.
Accelerators may be one way to help develop the innovative economy, by providing support to start-ups and innovative businesses in key sectors. However, we’re still short of evidence on policy design, such as the kind of support to offer, the length of support and whether to target a particular sector. Future evaluation will be needed to help fill these gaps in the evidence base.
For information about other business advice programmes take a look at our other business advice toolkits, including a recently updated toolkit on business training.
