Industry leaders say there are too many accelerators operating in the UK's 'overcrowded' tech scene

Business

Leading experts in the UK tech scene told Business Insider that London was "overcrowded" with too many accelerators producing too few successful companies.
More than 150 accelerators currently operate in the UK, a figure that has increased tenfold over the past decade.
Matt Clifford, CEO of Entrepreneur First, hit out at what he called Britain's "broken model" of startup investment schemes.
According to the latest research, around half of the UK's accelerators receive funding from larger corporations, such as Nike and British Airways.
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Industry experts have branded the UK accelerator scene "overcrowded", with too few early-stage investors capable of producing successful businesses.

Start-up accelerators have become popular in recent years, providing a combination of training, consulting and funding to fledgling businesses.

The accelerators vary hugely in terms of the resources on offer, investing anything between £15,000 and £100,000 in schemes lasting from three to 12 months, usually in exchange for a percentage of equity. More than 150 accelerators currently operate in the UK — up tenfold since 2009 — offering a combination of contacts, mentorship and financial backing to entrepreneurs building up their businesses from scratch.

Entrepreneur First, a self-described "talent investor", has backed more than 200 British businesses since it was founded in 2011, including AI start-up Magic Pony Technologies, which was bought by Twitter for an estimated $150 million in 2016.

Matt Clifford, CEO and co-founder, told Business Insider there was a surplus of accelerator programmes in the UK, describing the current system as a "broken model". He said: "You can count the number of accelerators with a functioning investment model on one hand."

According to the latest research by Nesta, an innovation foundation, around half of the UK's accelerators receive funding from larger corporations. Nike, EDF Energy and British Airways are among the big businesses that have launched their own schemes in the name of innovation.

Dr Christopher Haley, Nesta's head of new technology and start-up research, said many companies were backing accelerator schemes as a means of solving internal problems, adding that accelerators had "effectively become a form of outsourcing."

"My fear is that there are some corporate backers out there who don't know what they're doing, who haven't thought deeply enough about how their investments will pan out, and will end up leaving these start-ups without a home once they graduate."

Scott Campbell, director at Deloitte Ventures, suggested too many investors were engaging in "innovation theatre", offering the illusion of success with few tangible results.

"Accelerators can be hugely valuable to start-ups," he said. "But too often it's not clear what they are getting out of joining these programmes. At the same time, corporate accelerators can be unsure of the value they are trying to generate from a start-up."

Dr Haley, who is currently working on a new report looking at accelerators in the UK, commissioned by the Department for Business, Energy and Industrial Strategy, said its preliminary findings suggested accelerators could have a positive impact "but not all of them".

"It remains to be seen how many of these programmes will survive, since many are struggling with their business model," he said.

"Entrepreneurs should be aware that there is a significant variation between programmes, and be sure to undertake research before signing up."

Nike, EDF and BA did not respond to requests for comment.

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