ENTREPRENEURSHIP
T here are 440 incubators and Worldwide, there could be more than 10,000 of these supportive structures, according to the US National Business Incubation Association, with many of these based at universities and business schools. But what are the differences between incubators and accelerators, what types of start-ups do they benefit most and how do they fit 314 accelerators in the UK alone, according to a recent report from the Sutton Trust. These figures represent a considerable increase on estimates from 2017, when UK innovation agency Nesta counted 163 incubators and 205 accelerators. Incubators originated in the US in the 1960s as a way of boosting local economies and are generally a space (or virtual space) offered at below market prices where a start‑up can take their project forwards with varying levels of support. Initially, incubators focused largely on providing basic facilities and services, often simply real estate, but then evolved to include shared resources offering start-ups access to facilities and services that were not affordable at the early stages of their development elsewhere. within a university’s start-up ecosystem? The evolution of incubators Incubators can be run by universities for the benefit of their own research spin-out companies, as well as student start-ups. Corporations, meanwhile, can create incubators to harness innovation and offset the common concern of organisations losing their entrepreneurial spirit as they grow. Local authorities or governments might also run incubators to boost innovation and jobs in specific areas or regions. Today’s incubators have evolved further and often include mentoring, access to capital and centralised services, such as marketing and accountancy, allowing start-up leaders to concentrate on their business with fewer distractions. Many incubators also specialise in a certain industry, such as fintech or biotech, and
on the other hand, have evolved from the software industry and focus on the provision of services for companies who do not require use of a physical space or infrastructure. Metrics and indications of success Determining the success of incubators and the relevant metrics involved are likely to relate to their source of funding. Private, for-profit incubators make money from rent and occupancy rates or by taking an equity stake in the companies they house. Non-profit incubators, such as those funded by governmental or local authority bodies, as well as many of those operated by universities, can generate revenue from grant funding. Here, indications of success might include the number of successful projects served, survival rates for graduating start-ups and any impact they have had on the growth of jobs, as part of wider initiatives aimed at regenerating or diversifying the local economy. For a university incubator, an additional metric often revolves around its performance in building the university’s brand by contributing to the local economy and helping to commercialise university inventions for public impact. Examples within the higher education industry include the University of Oxford’s Startup Incubator and the Hatchery at University College London, each of which grants support to current students, recent graduates and university staff. Outside higher education, there are further graduate- friendly options, such as Station F in Paris – heralded as the world’s largest start-up campus – and the fintech- specialist incubator Level39 in Canary Wharf, London. In addition, a new incubator for African healthcare ventures aimed at students in sub-Saharan universities, FuturizeU, launched last year, with support from pharmaceutical giant AstraZeneca. Generally, incubators do not have a strict time limit for occupancy, but it is expected that successful companies will outgrow the incubator and ‘graduate’, leaving for a science park or other premises as the business expands. Incubators suit early-stage businesses that are yet to finalise their product. Their facilities and services allow these enterprises to develop in a supportive environment with a dedicated space – especially useful for biotech companies or other hi-tech companies that need development time. How accelerators differ While there is sometimes a degree of overlap in the definition between incubators and accelerators, there are some key differences. For example, an accelerator generally has a shorter and more clearly defined timescale of participation. This is often between three and 12 months, with the delivery of a structured programme of activities and less emphasis on real estate space.
this facilitates networking with potential customers, collaborators and suppliers at the incubator itself.
Capital-intensive ventures, such as those in the biotech space, require physical space and time to conduct and complete their research and have much to gain from incubators. Virtual incubators,
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Business Impact • ISSUE 1 • 2024
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