New firms and startups create more jobs than any other business enterprise.
It is no surprise that they have garnered increased attention from policymakers faced with stubbornly high unemployment rates in the aftermath of the great recession.
Young startups are particularly needy, and require everything from basic resources such as office space and a desk, to finance and mentoring.
Policymakers are, therefore, justified in wanting to nurture supports to help startups.
Business supports for entrepreneurs are available at local and national level.
At a local level, Local Enterprise Offices provide a range of services, advice, and financial support.
At a national level, Enterprise Ireland operates a wide range of programmes and schemes to support fledgling businesses.
A common model of developing and supporting new business ideas is through an incubator or accelerator programme.
The business incubator concept has existed since the early 1960s, and they typically provide office space and support services to resident businesses for a reduced rent for a period of up to five years.
Accelerator programmes are based on a competitive process, typically a pitching competition, at which hopeful candidates give a short presentation of their business idea.
Programmes run for a short period, typically for 12 to 16 weeks, during which participants are provided with office space, mentoring and intense training, and the opportunity to present their business idea to investors.
A feature of most accelerator programmes is that participants are provided with investment of between €15,000 and €20,000 for an equity stake in the business, which ranges from 3% to 8%.
The high-profile success of a few accelerator programmes in the US has led to the rapid expansion of the model worldwide.
There are now anywhere between 500 and 2,000 accelerator programmes in 70 countries.
There are currently over 25 accelerator programmes in Ireland.
The recent announcement by Enterprise Ireland of a €3m programme for industry accelerators that focus on financial services, clean energy, life sciences and food, indicates the growth of Irish accelerator programmes shows no sign of slowing.
Irish accelerators can be broadly classified in three types. There are the university-based accelerators, such as UStart at Dublin City University or Ignite in University College Cork.
There are state-supported accelerators such as the National Digital Research Centre, which was ranked second best university business accelerator in the world last year.
And then there the private accelerators such as Dogpatch labs or Propellor.
While Ireland has a vibrant startup scene, there is a relatively small pool of applicants for accelerator programmes.
This is reflected in acceptance rates: 21% of applicants are accepted onto accelerator programmes in Dublin and 42% of applicants get accepted outside the capital.
This compares with mean acceptance rates less than 6% worldwide and less than 4% in Europe.
Despite a smaller pool of applicants, Irish accelerator programmes attract participants from all over the world.
Notwithstanding an explosion in the number of accelerator programmes worldwide, we know very little about the success or otherwise of the accelerator model.
Another consideration is how we define success of accelerator programmes.
A commonly used metric is ‘post-accelerator funds raised’, which tells us, in fact, very little.
In Ireland, there have been notable successes — Trustev founded by Cork native Pat Phelan, a graduate of the Wayra accelerator — was sold to Transunion for $44m last December.
Soundwave — a graduate of NDRC — was acquired by Spotify in January.
We need, however, in Ireland to avoid establishing multiple generalist accelerators.
In establishing UStart, we realised that students’ ideas were at a very early stage of development.
Our aim was to provide an immersive entrepreneurial experience, where participants lived and worked together, received seed funding, collaborated in multidisciplinary teams, as they endeavoured to bring their business ideas to market.
This model will not suit all accelerators, but it emphasises that programmes should be adopted for specific environments and participants.
I highly recommend the accelerator programme to entrepreneurs seeking to develop their business idea in a supportive environment.
You will spend 12 weeks in a room full of optimistic fellow travellers, accompanied by geeks clustering around laptops, staring into screens as you work through the night, consuming copious amounts of coffee and caffeine-laden beverages.
Your accelerator programme will not turn your idea into a billion dollar company overnight, but you will quickly realise whether it will succeed or fail.
I suggest the following advice to startups considering a stint in an accelerator programme.
Make sure the accelerator is the right ‘fit’ for your idea. And do not confine your search to Ireland.
It’s not all about the money.
Do not select an accelerator programme based on the amount of cash they are prepared to give you.
Do a forensic analysis of what the accelerator programme offers and do not become an ‘accelerator tourist’.
Beware the advice of experts: What worked in the past may not necessarily work again.
Drop everything else to focus on the project.
But if it’s not working, drop it.
Be sure to practice your pitch 10 times a day and collaborate with your colleagues.
Ciarán Mac an Bhaird is founding director of UStart, Ireland’s first university-based accelerator for startups.
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