– the future
Accelerators, incubators and accountants
This report examines how alternative business support models, such as accelerators and incubators, are being used to allow more small to medium-sized enterprises (SMEs) and start-ups to achieve rapid growth and support their recovery post Covid-19. It also highlights the growing importance of small business support ecosystems and provides information for accountants and small and medium-sized practices (SMPs) looking to collaborate with these new support models. The report is based on a number of case studies from around the world and provides practical insight to SMEs and accountants looking to interact with these support models.
What are accelerators and incubators?
There is no hard and fast definition of incubators and accelerators, but very simply they are support mechanism to help businesses grow.
Incubators support business creation and development. They are typically physical spaces that provide additional services such as training and mentoring for entrepreneurs, access to networks and, sometimes, specialist equipment or facilities such as laboratories. They can be non-profit institutions set up by universities, governments, agencies or donors, or commercial enterprises set up by private sector companies and investor groups.
Accelerators focus on growth and have historically put greater emphasis on funding, although elements such as networking, mentoring and market access are increasingly seen as equally important. A key feature of accelerators is that they offer highly selective and time-limited programmes
Both accelerators and incubators are also providing post- Covid-19 recovery support that is important for mature businesses looking to reimagine themselves.
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This figure graphically presents key distinctive features of accelerators and incubators as well as overlapping areas of support provided by both models. Experts interviewed for this report underline the increasing convergence between the two types of support models.
Accelerators and incubators are continuing to change the business support landscape
Depending on the country, incubators and accelerators can provide general business support and access to finance to a wide range of start-ups and SMEs, or in-depth support concentrated on specialised industry verticals and sectors. Their goals differ between countries and regions: in the emerging markets the aim may be primarily to foster entrepreneurship as an alternative to employment and encourage businesses that will themselves create jobs. In more mature markets, such as the UK, incubators and accelerators may focus more narrowly on very high-growth sectors and candidates.
Accountants can augment and support this evolving ecosystem
The role of incubators is generally either to fill gaps in existing support for businesses or to go above and beyond such support, as well as ensuring that businesses do in fact access that support. They cannot and do not attempt to replicate the accountant, and accountancy firms should not feel threatened by these models, but rather seek to join the ‘ecosystems’ that are growing up around them.
Accountants, can play a vital role in the new business support infrastructure and also complement it. Start-ups and growth businesses need sound financial management and data as they start and grow their businesses. Accountants and small and medium-sized practices (SMPs) can provide much more than mere compliance – they can become growth partners, and grow with their clients. Working with the accelerators and incubators might also mean access to clients or the introduction of their own clients to the right incubators or accelerators.
SMPs in particular can adopt some of the techniques and approaches used by accelerators and incubators and become “enterprise growth hubs” themselves. Some of the progressive practitioners combining their expertise powered by digital are already acting as accelerators and incubators for groups of high growth businesses and are also supporting the businesses seeking for support in their recovery or transformation post Covid-19. (Find more details in Incubators, accelerators and accountants: Key points of synergy)
Incubators and accelerators foster responsible and sustainable enterprises
Some incubators and accelerators are very much targeted on a particular social impact, whether that be social inclusion, sustainability or other social benefits. But any incubator will be looking to set its entrepreneurs on a path which is both financially and socially responsible, pursuing not just growth but sustainability. The ecosystem mentality may have wider applications in promoting business resilience and sustainability more generally.
Impact incubators demonstrate how the support model can be fine-tuned to produce social outcomes.
New business support models will play a vital role in post-Covid-19 business recovery
Covid-19 has put extreme pressure on smaller businesses, many of which have had to close their doors as a result. Others have experienced extremely rapid growth. Many support networks have found their members and alumni looking to them for support, not to grow but to survive. A number of incubators and accelerators have activated their members and former members to work together for mutual support and to find innovative solutions to a range of issues thrown up by the crisis.
In this crisis, the tool sets developed by the incubators have proved very adaptable: existing businesses may have been forced into start-up, or rather ‘start-anew’ mode, looking for new business models that will enable them to find new markets or serve existing customers in different ways, while coping with pressures on supply chains, logistics and finance. Others will have had to cope with the consequences of explosive and unexpected growth putting a strain on all their systems.