• On average, over 5 years, an additional £48 million was invested in regions where an accelerator had taken place.
• The report is first of its kind to analyse the impact of accelerators and incubators in the UK
• Calls for obligatory data-sharing from publicly-funded schemes to help underpin national policy decisions on these programmes

New research published today has shown that business accelerators and incubators in the UK not only contribute to the success of the startups they support but have positive spillover effects for the surrounding areas.

The research draws on commercial data to understand how the launch of an accelerator might impact the rest of the region. It found that within five years of an accelerator launching in a given region, it was associated with an additional £48 million on average being invested in technology sectors - an increase of 243%. The results also show that this increase in investment is not driven by investments going to accelerated firms but to those outside the accelerator programme.

Previous research has pointed to the increased exposure to entrepreneurial activity that accelerators bring to the region, such as social events open to the public, as an explanation as to why investors take an increased interest in these areas.

The report published today is the first of it’s kind to analyse the impact of incubators and accelerators in the UK. The research gives a picture of the impact across the UK at a time when £20-£30 million of public funding (UK & EU) is going into accelerators and incubators every year.

Given these findings, the authors of the report recommend that public funders invest in pilot programmes in order to continue benefiting regions directly and to prioritise building evidence that can help shape policy in this area.

Other key findings from the report show:

• Most startups (over 60%) consider the contribution of the incubator or accelerator they attended to have been significant or even vital to their success.
• Of startups surveyed, 75% perceived direct funding as very useful, followed by office space (59%) and lab space or technical equipment (58%).
• Accounting for selection bias, accelerators still typically have a positive effect on survival, employee growth and funds raised.

Jonathan Bone, Senior Researcher at Nesta and one of the report’s authors, said:

“At Nesta, we strongly believe policy should be underpinned by rigorous evidence so we are happy that this research begins to map the impact incubators and accelerators can have on UK businesses and the wider ecosystem.”

“However, accelerators and incubators are just one part of the toolbox of interventions which can help boost innovation and entrepreneurship. Further work needs to be done to understand the relative cost-effectiveness of these different tools which amongst other things also includes tax credits, network building and grants.”

Juanita Gonzalez-Uribe, Assistant Professor of Finance at The London School of Economics and Political Science and one of the report’s authors, said:

“Accelerators and incubators are an increasingly important policy tool, but still remain understudied. I see this research as a first step to better understand the effects of these programs on the UK economy. Further work is still needed to distil the mechanisms through which these programs can affect firms, entrepreneurs and communities.”

On the back of this report, Nesta is calling for obligatory data-sharing for incubators and accelerators that are publicly funded, as well as further investment into pilot programmes to understand the importance of incubators and accelerators to startups survival and growth.

ENDS

For more information, please contact Wallis Grant in the press office at [email protected] or on 0207 438 2581 / 07557 162 651

About the research

This report was prepared for the Department of Business, Energy and Industrial Strategy by Nesta, and does not necessarily reflect the view of BEIS.

The principal authors were Drs Jonathan Bone and Christopher Haley of Nesta, Dr Juanita Gonzalez-Uribe of the London School of Economics, and Dr Henry Lahr of The Open University, with assistance from Henry Whorwood and Jake Ford from Beauhurst.

About Nesta

Nesta is an innovation foundation. For us, innovation means turning bold ideas into reality and changing lives for the better. We use our expertise, skills and funding in areas where there are big challenges facing society. We've spent over 20 years working out the best ways to make change happen through research and experimenting, and we've applied that to our work in innovation policy, health, education, government innovation and the creative economy and arts. Nesta is based in the UK and supported by a financial endowment. We work with partners around the globe to bring bold ideas to life to change the world for good.

www.nesta.org.uk

Nesta is a registered charity in England and Wales 1144091 and Scotland SC042833.