Do Startup Support Institutions Deliver Results?
In an earlier article it has been shown that formal university-based Entrepreneurship Training programs have had minimal impact in creating entrepreneurs. “Where have all the entrepreneurs gone?” remains the mantra. At a meeting recently, the owner of a startup accelerator stated that his biggest problem was finding entrepreneurs! This is the first of three articles that will examine startup support institutions. This article provides an overview while the next two articles will specifically address accelerator and incubator (and co-work spaces) effectiveness.
There is great confusion about what is an accelerator, an incubator or a hybrid institution. The names are often used interchangeably even though each of their approaches have significant differences from each other. Ian Hathaway in his March 2016 Harvard Business Review article “What Startup Accelerators Really Do’” has laid out clear characteristics of each in an easy to understand table that I have reproduced in Chart 1.
Startup Support Institutions
The innovation charity Nesta frames startup support institutions differently; dividing them into three broad business models:
- Growth-driven: dependent on growing the startup as it generates revenue from equity,
- Fee-driven: charge clients member and service fees as well as rent, and
- Independent: supported by sponsors, public funds, and events. [An earlier blog shows that this category has minimal impact].
The number of startup support institutions has grown large (it appears to be the IN fad) growing into a multi-billion dollar business with virtually no accountability or assessment of effectiveness until recently:
- Growth driven: 200-3,200 (Brookings Institution and Fast Company),
- Fee driven: 4,200+ (Fast Company), and
- Independent: 8,300+ (Entrepreneur training: minimal startup impact).