The number of start-up programmes in the UK has risen more than 110% in three years, lending further support to a new batch of successful British startups.
A report commissioned by O2, the first to comprehensively examine the UK incubator and accelerator market, suggests that start-ups that participate in more formal support programmes are more likely to survive than those that don’t.
Incubated and accelerated start-ups are more likely to secure significant financial investment, an average of more than £68,000 once they’ve graduated, the report found. Such start-ups gain more than financial backing. The support and guidance they receive gives them an edge over their competition.
Of those programmes able to quantify the number of start-ups still operating, the survival rate for start-ups reaches almost 92 per cent, compared to a two-year survival rate of 75.6 per cent for all small businesses
The O2 report revealed a 110 per cent 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. Such rapid growth has stemmed from several sources.
Over 40 per cent 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 per cent are owned by large corporate enterprises, with Telefónica, John Lewis, Barclays and Distill Ventures (Diageo) all launching their own programmes, while another 25 per cent are affiliated to educational organisations such as Universities or Business Schools.
This 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. However there remains a stubborn regional divide, with almost two thirds (61 per cent) of such programmes based in the capital – ten times more than the number outside it.
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.
However larger cities in North England and Scotland, such as Birmingham and Edinburgh, are demonstrating promising growth as accelerator and incubator hubs. Both have doubled the number of programmes operating in the past two years to four and three respectively.
“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,” said Feilim Mackle, O2’s sales & service director and O2 Board sponsor for Wayra in the UK. “A loss in momentum could see some of the UK’s best entrepreneurial talent go to waste.”