In the hothouse
Is an accelerator or an incubator the best springboard for startup success?
Tuesday, February 07 2012 || Features || BY Matt Philp
Illustration: Gary Venn
It’s generally accepted three and a half minutes is the ideal amount of time to boil an egg. But what’s best when it comes to helping startups kickstart growth?
Does the incubator approach (yep, it’s eggs again) in which a company is given shared workspace and mentoring over an extended period of up to two years, produce the goods? Or should a startup opt for an accelerator programme, a short and sharp examination of the merits of a business idea with the prospect of investment at the end?
New Zealand businesses have never had a choice — we do incubators, not accelators. But with the Ministry of Science and Innovation putting together an accelerator programme and Wellington’s Webfund planning a six week startup camp for next year called HyperStart, Kiwi startups wanting a helping hand now have a dilemma: to incubate or accelerate?
Serial entrepreneur and Minimonos founder Melissa Clark-Reynolds is a strong proponent of the fast track approach and says it is particularly appropriate for digital businesses like hers. Minimonos, a virtual world for children, this year became the first non-European Union company selected for the Springboard accelerator programme in the UK. Clark-Reynolds says the experience pushed her Wellington-based business forward a year in just 13 weeks and produced an immediate payoff when growth, steady at 25%, jumped to 40%.
The quality of the Springboard mentors was key. They challenged assumptions — from being convinced that Minimonos had to conquer the big US market, Clark-Reynolds has been persuaded of the wisdom of targeting the UK. They also opened valuable networks. “We pitched to more than 30 venture capitalists around the UK and Europe. To get in to see them from New Zealand would have been impossible — probably impossible for your average English businessperson. It was Springboard. We were pre-vetted.”
All this from one quick, three month hit. “That is what acceleration is good for. It’s about saying, ‘What are all the resources we can pack around this? How fast can you test this idea with your target market? How can you keep tweaking and testing it until you have something that can grow?’ And you don’t waste time or resources on stuff that isn’t going to work. So the ‘fast fail’ is seen as a win.”
Or All?
Why do we need to make a choice here? What if there is a good match for incubation for some, a good match for acceleration and a good reason for some to select neither? What if start up weekends are an excellent choice for a segment of the entrepreneurs-to-be market? What if it really depends on the business experience of the founders, on their motivation, on the industry, etc. There are many ways to start and if you hear the successful ones talk about how they did it you will find that there is no universal best way. It is the diversity of options and competing models of how we can support start ups that needs to be protected to enable us innovate how we do it. I believe we should do it the Kiwi way, not the UK way. I believe our incubation system is the leanest in the world and that is why people in the industry come to learn from us. I believe that we should not discontinue incubators just because in some other countries they were unable to run them efficiently and came up with a different way.
Posted by Anonymous at 07:44 on February 7, 2012
Why do we need to make a choice here? What if there is a good match for incubation for some, a good match for acceleration and a good reason for some to select neither? What if start up weekends are an excellent choice for a segment of the entrepreneurs-to-be market? What if it really depends on the business experience of the founders, on their motivation, on the industry, etc. There are many ways to start and if you hear the successful ones talk about how they did it you will find that there is no universal best way. It is the diversity of options and competing models of how we can support start ups that needs to be protected to enable us innovate how we do it. I believe we should do it the Kiwi way, not the UK way. I believe our incubation system is the leanest in the world and that is why people in the industry come to learn from us. I believe that we should not discontinue incubators just because in some other countries they were unable to run them efficiently and came up with a different way.
Posted by Anonymous at 07:44 on February 7, 2012
Or Neither
I suggest that there are many more successful start-up businesses that never use an incubator or accelerator - something companies should consider. Much of what incubators offer are avaliable outside of that mechanism - perhpas slightly harder to co-ordinate but also companies have the option of getting the best people invovled and not just the ones aligned to a particular incubator.
The growth in the accelerator programmes offshore appear to be heavily linked to access to quality investors and investment - that is certainly worth considering. I caution against thinking that the success of these internationally will be replicated in NZ, we do not have the investment resources (people and $$s) required.
Posted by Anonymous at 01:32 on February 7, 2012
I suggest that there are many more successful start-up businesses that never use an incubator or accelerator - something companies should consider. Much of what incubators offer are avaliable outside of that mechanism - perhpas slightly harder to co-ordinate but also companies have the option of getting the best people invovled and not just the ones aligned to a particular incubator.
The growth in the accelerator programmes offshore appear to be heavily linked to access to quality investors and investment - that is certainly worth considering. I caution against thinking that the success of these internationally will be replicated in NZ, we do not have the investment resources (people and $$s) required.
Posted by Anonymous at 01:32 on February 7, 2012
You mention that NZ incubators are lean etc. But what is more relevant is what value they have added and how this compares to international experience. I suggest that the data provided out of the Isreal incubator model would tend to support the premise that the NZ system has not performed that well. Maybe under resourced (too lean to be effective).
It is interesting to see that both the Icehouse and Powerhouse have set some fairly big goals for the next few years - does this reflect that they have just got so much better or is it also a reflection that the past 10 years as actually not been that good relative to offshore experience. Perhpas trying to stay in business by saying they will do so much better next time.
Would be interested to see an independent review of the incubator programme. Certainly my experience is that NZTE are never pro-active in managing the money they invest into programmes so this could drag on for years not delivering before anyone bothered to worry.
Posted by Anonymous at 09:38 on February 8, 2012
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