The growth of impact accelerators

On Tuesday of last week, I went along to a couple of Demo Days for impact accelerator programmes in San Francisco. First up was Code for America’s Accelerator and then a little trail of investors headed straight from there to Greenstart later in the afternoon. Both were really interesting and congratulations to the teams and organisers for putting on such a great show. Just how many Demo Days there are over here (Imagine K-12’s was the previous Friday) made me realise how normal they’ve become as part of the startup ecosystem.

It also got me thinking about the reasons for the growth in these programmes — there weren’t really any social impact programmes when we did the research for the Startup Factories but there are now tens of them in the US and an increasing number in the rest of the world. This map includes co-working spaces and accelerator programmes:

I think three main reasons came through from the demo days:

  • The first is the size of the market and demand from investors. This was pushed pretty  hard by Ron Bouganim director of the Code for America accelerator. He talked about how he’d invited investors to come and meet their civic startups who had been sceptical of the size of the opportunity at first but left saying something along the lines of ‘how did I miss this?’. At Greenstart Mitch Lowe didn’t need to make the point — the room was packed with over 200 investors. I hadn’t quite realised how much bigger the cleantech investment world in San Francisco is compared to the UK.
  • The second reason is the effect that social impact programmes can have on a place. Mayor Edwin Lee was the first speaker at the Greenstart Demo Day and talked about how important new startups were to the city. From a UK point of view I tend to lump the Bay Area all together as ‘Silicon Valley’ but there’s actually a lot of competition for new job creation between San Francisco and the places along 101 further south.
  • Finally, at the CfA Demo Day Tim O’Reilly summed up what I think is probably the strongest reason behind the growth of social venture accelerators — it’s ultimately because of demand from founders. Tim sums up his approach to spotting future trends as ‘hanging out with the alpha geeks’ and at the moment they’re telling him that using tech to solve social problems is where the action is. “It’s becoming cool to want to make a difference” he told the audience at Code for America. It’s something I’ve seen happening amongst the best technology people in London as well.

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The Startup Factories

I’ve just started working on a great little project with Nesta looking at the new breed of ‘business accelerators’ that are helping early stage high tech companies in the US and Europe. We’ll publish it as a short book in the middle of the year but up until then I have the fun job of finding out all about the likes of Y-Combinator, Techstars, Seedcamp and Springboard and working out what really makes them tick.

I first came across the idea of accelerators when Matt Jones and Matt Locke suggested we should apply as School of Everything to the newly created Seedcamp in 2007. It was quite an experience. Dougald did a lot of the work on our application which I seem to remember us pulling together very quickly, then we had an incredibly awkward conference call with the judges where I think they’d already heard about 40 pitches in a day and some were quite obviously a bit bored. But a couple of days later Reshma called back and asked if we could make it. We jumped at the chance.

I think it’s safe to say that none of us really knew anything about the tech startup and investment world at that stage. We had met a few investors through a friend but it was very clear even then that we were ‘too early’ for any of the London VC firms. We’d also met one angel investor but the idea that someone would invest the money themselves rather than through a fund was new to me at that stage. In the five days of the Seedcamp week we learned an incredible amount about that world and the whole thing gave us a leg up and certainly inspired me to pursue it further. We went away with a bunch of people telling us we had something that might just work as well as a few who didn’t quite get it of course.

Although we didn’t get any investment from Seedcamp or immediately from any of the people we met there, it did serve us very well over the following months. Within six months we’d signed a seed funding deal with a whole bunch of angel investors as well as the Young Foundation and Channel 4 which I’m really not sure we would have got if it weren’t for the validation that Seedcamp gave us and the things we learned about that week.

Since then I’ve been a mentor for Seedcamp and enjoyed it a great deal. I was at mini-Seedcamp in London yesterday as it happens. I like seeing early stage companies pitch and helping where I can. I do think there are a few things that could be improved on but in general I think it’s is a brilliant addition to the London tech scene and can celebrate a lot of success both directly and indirectly.

I think it was Saul Klein (co-founder of Seedcamp) who first mentioned Paul Graham to me and that was when I started looking at Y-Combinator. It’s become one of the most interesting institutions in Silicon Valley (although it didn’t start out there oddly enough) and the more I learned about Y-Combinator, the more I thought it was a fascinating model, with almost every stage of the process thought through and optimised. As we started to develop Social Innovation Camp in the UK, Anna and I started to think that we should move to more of a Y-Combinator model for social startups. Hence Bethnal Green Ventures which we ran the first cohort of between October and December 2010.

I’ll be posting early thoughts and some snippets from interviews as we develop The Startup Factories (our working title for the project) here. We’ll be travelling to visit some of the US accelerator programs in late February and we’re lining up some brilliant contributors to write essays that we think will help people understand the phenomenon. I’ll still be working on School of Everything pretty much full time so this is going to be an interesting exercise in time management for me but it does feel good to be getting back to a bit of research and writing.
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