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Is an accelerator programme what my business needs?

Work colleagues brainstorming in creative office.GettyImages-511069895
More than half of the accelerators in the UK are funded by large companies and corporations. Photograph: Oli Kellett/Getty Images

The past five years has seen a boom in the number of accelerator programmes in the UK. A recent report by Nesta listed over 163 accelerators active in the UK, with the majority coming into operation since 2011. Accelerators aim to speed up the development of startups and small businesses through an intense schedule of workshops, lectures and mentoring sessions. Entrepreneurs report great successes with them. But they typically involve serious commitments of time and money and, in many cases, the sacrifice of equity.

The Nesta report, Business Incubators and Accelerators: The National Picture found that London was home to the most accelerators, but most major UK cities also have programmes. Indeed, many accelerator programmes are open to applicants from across the UK or even Europe and the wider world.

Wil Benton is a programme director on Ignite, a Newcastle-based accelerator programme. The programme takes applicants from across the UK and also has bases in Manchester and London.

Benton and his business partner Ben Bowler originally joined Ignite in order to develop their live streaming music company Chew. They relocated from London to Ignite’s HQ at Campus North, Newcastle, for the three-and-a-half month programme at the end of 2014 where the business underwent a complete transformation. “We’d never run a business before and we didn’t really know what we were doing, so we started applying to accelerators,” says Benton.

During the course, Chew ditched their initial business plan, which focused on working with record labels and promoters, to create a consumer-facing business. Following the course, investors backed the business and the company raised £120,000 in 2015. They were then able to hire a developer, grow the business and subsequently raise £175,000 on crowdfunding platform Seedrs in April 2016. “Ignite helped us focus on what Chew should be, rather than what we wanted it to be. We restructured what we were doing and used the technology we’d built to create a B2C community-based web platform, rather than an agency offering,” Benton says.

As is common with many accelerator programmes, Ignite took a stake in the business. In this case, Chew received £40,000 for 6% of its equity, although the course fees cost £15,000, so the company netted £25,000. 1% of the equity goes to other startups on the Ignite scheme in order to incentivise them to help. Benton says Chew is now close to being acquired and credits the accelerator with much of its success.

“Professionally, the 12-week programme with Ignite was probably the most important thing I’ve ever done. It takes first-time founders with early-stage businesses and helps them crystallise what they do. It helps them to go on and scale. Ignite focuses on the people as much as the idea,” he adds.

There are many different types of accelerators available to UK startups. For instance, the Climate-KIC startup accelerator does not take an equity stake but provides grants and mentoring to businesses aiming to tackle climate change. The EU-funded programme has offices in London, Edinburgh, Birmingham and Dublin. Clearly, it makes sense to research accelerator programmes thoroughly and to find the right one for your business before committing.

The hardest idea to get used to was simply being comfortable with being uncomfortable

Kuljit Thiaray, founder, Desi High Street

Kuljit Thiaray is the founder and owner of online Asian goods marketplace Desi High Street. She researched many accelerators until Entrepreneurial Spark in Leeds caught her attention. Unlike many accelerators, there were no costs or equity sale, and she was also provided with office workspace in the centre of the city. “Each accelerator will have its own culture and values and you should see which resonates with you the most,” advises Thiaray.

The 18-month programme began with an “intense, two-day bootcamp”, followed by fortnightly Wednesday evening event nights as well as other mentoring sessions and workshops. Thiaray already had a business plan mapped out but was surprised by how quickly she was able to launch. “If I had not entered the accelerator I would not have had the confidence, or the ability, to have launched so quickly,” she admits.

Thiaray says the programme helped her to develop a “growth mindset” – a confident, can do outlook which helped her succeed. “Entrepreneurs with a growth mindset embrace challenge and see it as a way to develop themselves and their business. It’s about overcoming the hurdles, getting on and taking action,” she explains. “The hardest idea to get used to was simply being comfortable with being uncomfortable.”

More than half of the accelerators in the UK are funded by large companies and corporations, the Nesta report found. There appears to be a mixture of motivations for banks and blue chips to want to work with startups, but surely one of them is that they see startups as key to finding new and innovative ideas.

David Levine is the founder and CEO of Manchester-based Digital Bridge, which has developed augmented reality software enabling people to see how products will look in their own homes. The company wants to work with global retailers to help them improve their web offerings.

“We’ve built a computer vision and machine learning platform which allows you to take a picture of your room and then automatically see how home decorations like wallpaper and carpets would look inside it,” Levine says.

His business joined the John Lewis JLAB accelerator programme as the department store was a major target. Levine says he’d previously had a number of meetings with John Lewis but had been unable to formally agree a deal and was very frustrated by the lack of progress. So when he heard of the JLAB opportunity, he was initially very sceptical.

“I nearly didn’t apply as I didn’t think it was right for us. I couldn’t see how spending 12 weeks in London at our own expense would help us. So, up until an hour before deadline, I wasn’t going to do it, but I’m very glad I did.”

During the accelerator, Levine was able to spend quality time with senior executives at John Lewis, honing his offering, and is now preparing to launch on the department store’s website later this year. The business also received £100,000 grant from JLAB. But startups hoping to emulate Levine’s success should be aware that there is stiff competition for such prizes. “Over 280 companies applied, five got through and we won. It got us a lot of PR and really helped our profile and focused our minds on our project,” he says.

The pros and cons of startup accelerators

Pros

  • Offers the chance to network and make high calibre contacts.

  • Helps new businesses avoid mistakes and progress rapidly.

  • Entrepreneurs can gain top quality advice and mentorship.

Cons

  • Time consuming and hard work.

  • May involve equity sale, and / or other costs.

  • Places are limited so competition can be tough.

Content on this page is paid for and produced to a brief agreed with Hiscox, sponsor of the Adventures in Business hub on the Guardian Small Business Network.