The Impact of Business Accelerators for Startups in the UK
Business Accelerators in UK Invest £33M Yearly in Startups
In the UK, more than half a million startups have been launched every year since 2015. During the first two quarters of 2018, the UK has already registered more than 300,000 new businesses.
Entrepreneurs take risks to transform their ideas into businesses, however they don’t always see the results they expected. An entrepreneur faces many challenges throughout the whole business journey, such as getting a startup business loan or gaining access to investors to finance their projects. Thus, not all new businesses manage to to establish a thriving company and many drown in the wild competition.
Accelerators can make a difference for those who struggle alone, and can smoothen the process from startup to success.
Market Inspector has created an infographic illustrating how accelerators have become a phenomenon in the entrepreneurship scene in the UK. A compilation of data shows how these programmes help new businesses develop their products, attract investments, and become competitive companies.
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The Connection between Thriving Startups and Accelerators in the UK
Accelerator programmes have the main purpose of bolstering new businesses in different areas. The conditions are varied, but most of them offer mentorship (81%), direct funding (61%), and office workspaces (54%) during a fixed time between three to 12 months in exchange of a percentage of the startup equity, according to the British Department of Business, Energy and Industrial Strategy (BEIS).
While the startup is in the accelerator programme, entrepreneurs have the chance to receive guidance in order to carry out their ideas and transform them into profitable businesses. Techstars is one of the biggest accelerators that operates in several countries with a high success rate. Of the companies that have participated in Techstars’ programme, 76.4% are still active.
The requirements to enter a business accelerator programme are varied. While some programmes will take the stage of the startup into account, others will evaluate the potential of the idea. Thus, direct funding may also vary depending on the evaluation and the characteristics of the programme. In 2016, 61% of accelerators offered direct funding, and each startup received an average of £39,000, according to BEIS. The amount of funding fluctuates between £500 to more than £200,000.
Business accelerators in the UK have already boosted successful startups like Transferwise. Seedcamp accelerator led the first seed investment with €50,000. Transferwise has attracted several investments over years and has raised $396.4 million up until now. On a smaller scale, there are more successful examples from different fields, such as Pi-top, Flux, OurPath, and Basestone. Business accelerators in the UK are still a developing phenomenon that are based on trusting entrepreneur’s ideas and helping them realise them.
The Increasing Trend of Accelerators in the UK
Accelerators have become popular in the last five years. The number of programmes in the UK is growing exponentially. During the 2016 there were 163 accelerators, according to BEIS. The last update registered 171 programmes offered throughout different cities in the UK.
The programmes are mostly supported by private capital but also by public funds. Official agencies, institutions, and governmental plans finance 41% of accelerators. The BEIS report highlights the rise of corporate accelerators run by private organisations in pursuance of boosting innovation in fields they are interested in. As a result, successful brands like IKEA, Virgin, Deliveroo, and Just Eat have launched their own accelerator programmes.
Although London is undeniably a thriving international business hub, many organisations in cities around the world have seen the potential of creating their own accelerator programmes. Thus, places like Scotland and Northern Ireland have also seen a boom in entrepreneurship. The rising opportunities beyond the capital has encouraged entrepreneurs from all over the UK to start their own companies. This has shaped a prosperous and promising scenario that will develop many successful companies in the future.