How can accelerators set themselves apart from the competition?
By Arthur Puig - 10 March 2021
Startup accelerators are becoming increasingly widespread. In the UK, there are 181 accelerators (according to Nesta) and in France approximately 100 (according to Le Hub by BPI). According to Rolland Berger, while only 560 incubators and accelerators existed worldwide in 2009, there were 2,616 in 2019. Needless to say, this space is getting dense and it’s getting harder and harder to attract top startups.
So how can accelerators stand out?
Accelerators and incubators support startups at different stages of their development. On the one hand, accelerators offer short programmes (between 3 to 6 months) and aim to support the growth of already established companies with a commercialized product. On the other hand, incubators aim to help teams build a product or a company. According to a study by BCG and La Boussole, a startup backed by an external structure has two times more chances of being successful than those which are not. For example, Wilco which is a French accelerator has one quarter of their early stage accompanied startups which meet the first million of revenues within the 3 years of acceleration program.
Nevertheless, this growing offer increases competition among the accelerator ecosystem. The best startups have many options available to them in terms of accelerators. Thus, to be as attractive as possible, accelerators need to explain and show off what makes them unique. That can be their geographic focus, the types of innovation fostered, the startup maturity they cater to, etc.
Above all, accelerators should highlight the added value for the startup, which can be:
- industry expertise
- international leverage
- business networks
- regulatory advice
- partial financing
- other success KPIs related to former batches (funding attracted…).
Startups will be looking for tangible success cases that back up a programme’s claims. Of course, to be able to present success cases, accelerators need to set themselves up for success in the first place. Acceleration programme managers need to equip themselves with the right tools and partners to make their internal processes as efficient as possible.
How can accelerators optimise their processes?
There are many functions within an accelerator that can benefit from external support so as to free up time to focus on their cohort’s success.
Accelerator programmes are generally quite short, only lasting between three and six months. This means that as soon as they have chosen a cohort of startups, they should already be looking for the next one. This time-consuming process arguably reduces their ability to fully support their current programme participants.
Early Metrics has placed itself as a valuable option for accelerators looking to save time in the candidate detection process. By being fully integrated into the startup ecosystem and having a rigorous methodology, we are able to find startups that not only match the programme’s requirements but also have strong growth potential. For instance, we supported the media company Ouest France with their acceleration programme OFF7, allowing them to optimise startup sourcing and free up time for currently enlisted startups.
Once they have structured their application flow and shortlisted eligible startups, accelerators need to pick finalist startups with the highest growth potential. Indeed, all accelerators showcase the average growth (in terms of revenue, financial valuation or profitability) experienced by their accelerated startups during the programme. As such, they need to select startups that will help them stand out and attract equally strong participants in future.
Moreover, the final selection criteria will vary according to an accelerator’s thesis and the organisation behind the programme. For example, corporate accelerators have to think about the added value for their parent company. Meanwhile, regional accelerators will have constraints linked to the potential for local job creation.
To select startups with the best ability to scale, accelerators can again benefit from external support. Bordeaux Unitec, a regional accelerator and incubator in France, had shortlisted a batch of 15 startups but wanted a fresh perspective on the candidates. So, they called onto Early Metrics to do an independent rating of the finalists and help ensure they had made the right choice. The rating process included a deep analysis of each startup’s managing team, project and market, based on research and a two-hour interview with the entrepreneurs. Beyond quantitative factors, it also assessed qualitative aspects to get a complete picture of the strengths and weaknesses of each startup. This reassured Bordeaux Unitec in their choice and gave them insights on the points of improvement they could work on.
As mentioned earlier, in order to demonstrate the quality of their programme, accelerators need to show strong KPIs. These can be the survival rate of accelerated startups, their revenue growth, follow-on investments, frequency and size of exits, team growth, etc. The size and quality of their alumni network can also be a differentiating feature to showcase. While these KPIs can be calculated at the end of the programme, it’s difficult to estimate the long term impact. Will the startups have survived five years on? What might their revenue growth look like? And how do you measure qualitative value added, such as improvements in the startups’ product strategy?
Using startup ratings at different intervals can provide an idea of the mid-term growth prospects of the accelerated startups as well as get a tangible measurement of the programme’s impact. Barclays Rise London powered by Techstars is among the accelerators that has partnered with Early Metrics to do just that. By rating shortlisted candidates and the final cohort before the start of the programme and after, they were able to demonstrate that on average accelerated startups performed better than non-accelerated ones. Moreover, it showed that the startups in their cohort had a better growth potential score after completing the programme. This proved the beneficial impact of the accelerator.
Being able to measure the impact of an accelerator is important to attract high-quality startups, but not only that. Indeed, it can boost the chances of gaining the support of investors and backers. In the case of corporate accelerators, impact measurement is a powerful tool to protect budgets and get internal buy-in. This is especially true in current times where corporates might be tempted to cut non-core business activities.
A key component of the startup ecosystem
Accelerators are a valuable component of the startup ecosystem. Indeed, they help exciting businesses make their vision and innovative ideas come to life. Early Metrics is proud to have supported some of the best acceleration programmes in Europe. So we hope to help many more optimise their processes and showcase their impact.