Accelerator or Incubator? How to make the right choice – Eureeca



The number of business incubators and accelerators in the UK has grown rapidly over the last few years. This growth has been facilitated by public funding and it is estimated that between £20-30 million of public funding (UK and EU) is being spent on UK incubators and accelerators per year. Despite this, relatively little robust evidence exists regarding their impact.

A report by the Department of Business, Energy and industrial Strategy, titled The impact of business accelerators and incubators in the UK and published in October 2019, explored how incubators and accelerators impact the startups they support and investigated which types of support (e.g. provision of workspace, mentoring, funding or training) drive this impact. It also examined how incubators and accelerators may impact the wider business ecosystems in which they belong.

The report offered these defining characteristics of Incubators and accelerators:

Source: (Bone et al. 2017) adapted from (Dempwolf, Auer and Fabiani 2014)

According to the findings, most startups consider the contribution of the incubator or accelerator they attended to have been significant or even vital to their success

Through a survey of 428 startups that have previously or are currently attending (i.e. received some combination of support from) an incubator or accelerator, those that attended an incubator are slightly more likely (73%) to report attendance as being significant or vital to their success than those that attended an accelerator (64%).

The study found that accelerator participation is positively associated with startup survival, employee growth, and funds raised and that most types of support offered by incubators and accelerators are positively associated with at least one outcome measure, but few interventions can be positively linked with multiple outcomes. The evidence suggested  that the following types of support may have a positive impact: access to investors, access to peers, help with team formation, direct funding from the programme, press or media exposure, mentoring from an industry expert, help measuring social impact, mentoring from a venture capitalist (VC) / angel.

While some types of support offered by incubators and accelerators appear to have a direct impact on startup outcomes, others seem to be mediated by changes in startup behaviour. The study also found that the launch of an accelerator is associated with a significant increase in the number and value of investments made by VCs into non-accelerated seed and high-tech companies, relative to non-accelerated seed but non-high-tech firms.