Business accelerators are programs offering various varieties of support, including training, mentoring, access to work space and investments, for enterprises at an early stage of development to assist them survive the fragile early stages of growth. They can play a key role in the recovery from Covid-19.
In a recent study, funded by the UK government, we found evidence that participation in one particular accelerator (which is able to remain anonymous) was associated with increased business survival rates, increased investment and an increase in the number of individuals employed. This could possibly be crucial as recent businesses struggle to thrive in increasingly uncertain economic times.
ON our last count there have been a total of 163 accelerators in the UK. Most of them were created to encourage innovation in a given industry or promote local economic growth.
Increasingly, nevertheless, accelerators are being created whose goal is to unravel a problem that – although it exists the fastest growing in Europe, the UK start-up scene is far from diverse. Only a quarter of UK startups have a woman on their founding team and only 13% of investment in 2018. went to firms founded by women. Moreover, it is estimated that only 5% of small and medium-sized enterprises (SMEs) is led by an ethnic minority.
The underrepresentation of those (and other) groups is unacceptable not only from a moral viewpoint, but also from an economic viewpoint. Research shows that diverse founding teams are more revolutionary and bring higher financial results.
To put it in monetary terms, Rose Review estimated that if the UK achieved the same average proportion of female entrepreneurs as the countries that lead in supporting women’s entrepreneurship (Canada, the US, the Netherlands and Australia), it will add £200 billion of latest value to the UK economy. This unrealized potential is huge and can’t be ignored, especially right away.
New directions
Acceleration programs have been created whose important goal is to support entrepreneurs from underrepresented groups. Hatch Female Founder Acceleratorin south London is a six-month program whose important aim is to support BAME women-led businesses, with the support of Natwest, law firm Weil, Gotshal & Manges and BlackRock Investment.
TechHub Accelerate Program in East London, together with partners comparable to Google for Startups, supports BAME, women, LGBTQI+ people and disabled founders, providing them with access to workspace, meeting rooms, mentoring sessions and events for as much as one yr.
AND We in Social Tech development accelerator, also in London, is a six-month program for women-led social technology firms. It is run by the private enterprise agency Nwes and supported by Deutsche Bank.
Although the barriers to starting a business faced by different groups are varied and complex, It has been suggested that some challenges comparable to access to finance, access to appropriate entrepreneurial advice and lack of business skills and experience, are common in most.
While accelerators may in a roundabout way address the structural aspects that ultimately create these barriers, our research suggests that accelerators may have the option to assist founders overcome them by directly offering financing or introducing them to investors, pairing them with a mentor, and providing business support and training.
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Research conducted by British Business Bank found “little indications of potential bias” against female founders in the investment decision-making process. However, it also identified that the underrepresentation of ladies in industries most engaging to investors (e.g. software) and women, who are typically less connected to investor networks, constitute equally, if no more, significant barriers to women entrepreneurs’ access to finance.
Except that, latest academic researchhighlighted the particularly vital role role models play in inspiring underrepresented groups to launch startups.
By improving the survival rates of startups with underrepresented founders, accelerators can help strengthen support networks, change perceptions of what it means to be a successful founder, and create more credible role models, potentially helping to create more diverse firms in the future.
Objective
Given the great amount of public funding already committed to funding business accelerators in the UK (we estimate it can be £20-30 million per yr)there is an obligation to be certain that everyone can profit from them. This is not only about supporting these few programs, with a particular focus on underrepresented groups, but also about ensuring that each one publicly funded accelerators have an ambitious and proactive diversity and inclusion policy.
While ensuring diversity in accelerator adoption is essential to be truly inclusive, it is also vital that accelerators are accessible to businesses that are aligned with the real needs of the communities they seek to support. This does not all the time have to mean technologically advanced and rapidly developing firms, which and which accelerators often support may in themselves exacerbate inequalities.
However, the financing of accelerators is fair one of many tools available to decision-makers promoting entrepreneurship, this is a tool for which there is now solid evidence. However, prior research has not focused on the specific impact that accelerator programs can have on improving diversity in startups.
Future research that can unravel the effectiveness of accelerators in addressing the lack of diversity in startups in comparison with other initiatives with the same goal (e.g. events, networks, funds)and provides a higher understanding of tips on how to design accelerator programs to realize this goal can be extremely worthwhile.
A more diverse startup environment is higher for everyone. And while building diversity takes time and a multi-pronged approach, I imagine that the great work done by the accelerators mentioned here and others that aim to support entrepreneurs from underrepresented groups plays an vital role in achieving this goal.