Meteoric rise in UK start-up programmes: turbo-charging success

• Number of start-up programmes in the UK rises more than 110% in three years
• Telefónica responds by calling on businesses to continue to invest to ensure long-term sustainability of the start-up ecosystem

Start-ups that participate in more formal support programmes are more likely to survive than those that don’t, a new study commissioned by O2 suggests.

The report, which is the first comprehensive analysis of the UK incubator and accelerator market, suggests that not only are incubated and accelerated start-ups likely to secure significant financial investment – on average more than £68,000 once they’ve graduated – but the support and guidance they receive gives them an invaluable edge versus their competition. Of those programmes able to quantify the number of start-ups still operating, the survival rate for start-ups reaches almost 92%, compared to a two-year survival rate of 75.6% for all small businesses[1].

The research examines the incubator and accelerator ecosystem as a whole, revealing a more than 110% rise in the number of formal programmes operating over the past three years, with some 59 programmes supporting more than 1,100 start-ups in 2014 alone.

The report also reveals who is driving such rapid growth. Over 40% of all the start-up programmes in the UK are currently privately run, with a third of these receiving backing from public sector organisations. A further 12% are owned by large corporate enterprises, with Telefónica, John Lewis, Barclays and Distill Ventures (Diageo) all launching their own programmes, while another 25% are affiliated to educational organisations such as Universities or Business Schools.

Other interesting findings from the report include:

• The rapid rise of incubators and accelerators has put the UK ahead of its European counterparts when it comes to the number of programmes available for start-ups
• There remains a stubborn regional divide at home; almost two thirds (61%) are based in the capital – ten times more than the number outside it.
• However there is a promising sign of change. Cities such as Birmingham and Edinburgh are both demonstrating promising growth as accelerator and incubator hubs, both at least doubling the number of programmes operating in the past two years to four and three respectively
• Wales and Northern Ireland have a number of dynamic new co-working spaces or business centres, but they are relatively underserved by accelerators or incubators.

Feilim Mackle, O2’s Sales & Service Director and O2 Board sponsor for Wayra in the UK:

“Start-ups play an important part in contributing to the innovation the UK needs to remain globally competitive, and the report shows that accelerated start-ups have a far greater chance of success. 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 start-ups that benefit, by fostering and investing in these start-ups, we as a big business are able to learn from them and also bring the best products and services to our customers.

The rise in UK start-up programmes creates a unique opportunity for the entrepreneurs, but only if businesses and the Government take responsibility for investing in these programmes to ensure they offer long-term, quality support. A loss in momentum could see some of the UK’s best entrepreneurial talent go to waste.”

Business Minister Matthew Hancock said:

“With more than double the number of incubators and accelerators today than in 2011, the UK is fast becoming the best place in the world to start and grow a business. From London’s Tech City to exciting new clusters in Birmingham, Edinburgh and Manchester, large companies and Government are coming together to help foster exciting new businesses. We’re creating an environment where entrepreneurs can hone their ideas and thrive. We back Britain’s entrepreneurs every step of the way and always will.”

View the full report here. 

[1] Data taken from the latest ONS Business Demography report  http://www.ons.gov.uk/ons/rel/bus-register/business-demography/index.html