Incubators and accelerators provide UK startups with boost

Startups which take part in incubator or accelerator programmes are more likely to be successful than those who don’t, says research from O2.

Startups taking part in incubator or accelerator programmes are more likely to be successful, says research from O2.

The report concluded that the survival rate of startups that graduate from a programme reaches almost 92%, compared to the average two-year survival rate of 75.6% for all small businesses.

Meanwhile, startups from these types of programmes are likely to secure more than £68,000 of financial investment.

The research from Telefónica reveals the number of startup incubator and accelerator programmes have increased by 110% in the last three years, with 59 UK programmes supporting more than 1,100 startups in 2014.

These ecosystems usually provide young companies with workspace and access to investors and private sector mentors. More than 50% of all startup programmes are privately run, according to the research, with 25% belonging to educational institutions and a further 12% being owned by large enterprises. Telefónica has its own ecosystem called Wayra, while retailers and financial services have also launched their own programmes in recent years.

Feilim Mackle, O2’s sales and service director and O2 Board sponsor for Wayra in the UK: “Having set up the Wayra London Academy over two years ago, we have seen first-hand the advantages of acceleration; more than $28.6 million has been raised for Wayra’s companies. But it isn’t just the startups that benefit – by fostering and investing in these startups, we as a big business are able to learn from them and also bring the best products and services to our customers.”

Retailer John Lewis recently invested £100,000 in micro-location technology startup Localz, off the back of its JLab technology startup incubator. While Barclays also launched a startup accelerator programme to find innovative financial services technology (fintech) solutions in East London.

Derek White, chief design officer at Barclays, said a massive disruption was happening to the financial services industry.

White said the influx of startups is changing the way traditional big IT suppliers do business with banks. He said big established suppliers are starting to talk about how they can act more nimbly and innovate and disrupt themselves.

Large suppliers are even asking Barclays for advice on how to become more agile after the bank launched its mobile service PingIt in just seven months. “We have articulated the model as to how we acted as a startup internally to disrupt ourselves and we’re starting to industrialise that,” said White.

“They’re changing their engagement models with us as they seek to become more agile themselves,” he said. “I can count five large technology companies all of the names you would imagine have come to Barclays and have asked how we are doing it.”

The report also highlighted the regional divide in the UK, with 61% of ecosystems being based in London. Recently, Tech City UK launched a TechNorth cluster to link Manchester, Leeds, Sheffield, Liverpool, Hull and the North-East (Newcastle, Sunderland and the Tees Valley) to create a technology hub similar to that of Tech City in East London. It hopes to attract northern investors to the area and will work with UK Trade and Investment to support existing tech businesses and help them grow, while an unknown sum of funding will come from Whitehall.


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