Growth of incubator and accelerator programmes stagnating

The growth of incubators and accelerators is stagnating for the first time in years amid growing competition by corporates and private equity firms, who are launching and powering all kinds of start-up programmes. 

Start-ups can have a massive market changing potential, but before they can realise such ambitions, major financial and expert support is often required in order to enable them to launch their product or service into successful spheres. Tapping into this demand, the past decade has seen a boom in programmes providing support to (early-stage) start-ups, commonly known as incubators (focused on ideation) and accelerators (on growing an idea). 

Incubators and accelerators provide a host of services to start-ups, from basic to expert advisory services, access to industries and key players, and access to funding, among others. Top of the list of what is provided is mentoring or coaching, which is offered to 95% of start-ups, shows data sourced from Roland Berger, a global management consulting firm. Next in line, the vast majority of organisations (90%) provide workspace/training for participants to their programmes. Office space and access to experts is provided to 86% of companies, while connection to corporates is offered by 85% of programmes.

According to Roland Berger, in 2009 there were around 500 start-up slots at programmes offered by incubators and accelerators globally, with strong growth pushing this number to 2,400 in 2016 and over 2,600 in 2017.

Such programmes have meanwhile proven their success, attracting significant interest from venture capitalists and serving as the fundament of start-up ecosystems. Against this backdrop, a large number of scale-ups and unicorns have been built and groomed with the help of accelerators, including the likes of Sweden’s Spotify and the Netherlands’ Adyen. 

Last year however, for the first time since the phenomenon made its entry onto the stage, there was stagnation in the growth of the number of slots. In terms of availability, the US remained the largest market for incubators and accelerators, with around 1,000 slots, followed by Europe at around 500, while Asia ranked third.

The stagnant growth is attributed by the researchers to the maturing ecosystem for start-ups, basically meaning that they are in less need of the services offered by incubators and accelerators. Competition from two angles – corporates seeking targets to boost their innovation power (corporate venturing) and private equity firms searching for the next Google – means that there are many more alternatives available in the market that (can) match the core offerings of incubators and accelerators. 

“New offerings, such as corporate incubators or programmes run by venture capital funds, represent additional competition for accelerators and incubators. And given the high level of liquidity on the financial markets, start-ups are not dependent on investments from these kinds of providers,” explained Anne Bioulac, a Partner at Roland Berger in France.

She added that accelerators and incubators now need to innovate themselves too, or risk facing becoming irrelevant. “No longer can accelerators and incubators thrive just by offering office space or mentoring programmes and the like. They can only survive if they make themselves stand out from the crowd. One of the best ways of doing this is by consistently specialising in one industry or technology and having an international business model.”

Related: Dutch corporate venturing and start-ups scene needs to accelerate.