Incubator and accelerator programmes (sometimes known as seed accelerators) are becoming a common option for startups looking to grow. The first accelerator was set up in 2005 by US venture capitalist, Paul Graham, and their popularity and success in the US has since been replicated here in Europe.
What’s the difference between an incubator and an accelerator?
Incubators cater to new businesses and nurture their growth. Benefits such as shared office space, mentoring, and networking provide a framework to support early-start entrepreneurs. Incubation arrangements can last for up to five years, with most having built-in graduation benchmarks. Accelerator programmes, on the other hand, are geared towards businesses that are already up and running and ready to expand. As well as office space, mentoring and networking, accelerators usually provide seed capital in exchange for equity and may provide access to R&D facilities, training, and interns. Accelerator programmes typically last three to four months and culminate in a ‘pitching day’ where participants present their company to a panel of investors.
Getting into an accelerator
Access to accelerator programmes is usually a highly competitive process. Accelerators tend to be run by investors, who are selective about who accesses their capital. Working alongside investors can be an intense experience. A lot of learning and progress is condensed into a short period. Across Europe, there is a lot of interest in accelerator courses, but average acceptance rates are as low as 4%. According to the Irish Examiner, accelerator programmes in Ireland have higher acceptance rates; with 21% of Dublin applicants succeeding and 42% outside Dublin. The higher acceptance rates into Irish accelerators may be an indication of a smaller pool of applicants. If you’re thinking of applying to an accelerator, you’ll need the following elements in place:
- a strong team (it doesn’t have to be huge, but you need the key people in place);
- traction (if you have a product, this means a minimum viable product with users – paying or free trial);
- the liquidity and time to focus 100% on your business;
- an open attitude (you will be constantly challenged and should be open to constructive feedback).
Different accelerators will have different requirements, but this is a good starting point.
World-class accelerators available in Ireland
National Design Research Centre (NDRC)
The NDRC is currently ranked as the number 1 university accelerator in Europe and number 2 in the world. Focusing on digital and IT programmes, NDRC accelerators offer between €30K and €100K per venture. Courses are 12- 24 weeks long and operate from Dublin, Galway and Waterford. To date, NDRC has worked with over 226 companies. Between them, these companies have raised €152 million in follow-on funding. One such company is HouseMyDog, an online platform connecting dog owners and dog sitters. Brothers Timothy and James McElroy saw a booming pet industry and decided to bring the benefits of digitalisation into the field. “The pets’ industry is huge, it’s worth around $12bn annually. Two years ago we began looking into disrupting it with technology.” The brothers took their start-up through the NCRC Launchpad accelerator programme in 2016. HouseMyDog has since gone from strength to strength. The online pet community currently has 50,000 users and is growing. The company is expanding into Europe and has plans to launch an app and start selling related products.
The Ryan Academy
The Ryan Academy, based on Dublin City University’s (DCU) campus, is the result of a collaboration between businessman Tony Ryan and DCU. Several accelerator courses are currently available there. The award-winning Propeller SNN programme is an aviation and travel technology programme based in Shannon. Up to €45k investment is available in exchange for 7.5% equity. Female High Fliers targets the specific challenges facing female entrepreneurs. Startups must be less than five years old and entering a growth phase. Competition for this course is particularly rigorous. According to the Ryan Academy, there are typically 130 applicants per cycle, competing for 10 places.
RebelBio is the world’s first life sciences accelerator. Based in Cork, this programme provides access to fully equipped biosafety laboratory space, mentoring, and up to €150K investment. The three-month course aims to help scientists become successful entrepreneurs by turning their life science ideas into marketable products and services.
Trinity College Dublin students (undergraduate and postgraduate) can benefit from the summer accelerator programme, LaunchBox. The programme is open to new businesses and provides mentorship, investment, and a collaborative environment in which to learn and grow a business. Machaela O’Leary and Catherine Coffee graduated from LaunchBox in 2016. They created Lexi, an eLearning platform that assists non-English speakers to learn industry-specific vocabulary. Machaela is confident that the accelerator programme was just the stimulus their startup needed: “Without LaunchBox I don’t think Lexi would have reached the milestones it has reached in such a short amount of time. From the scope of the workshops to the value of the LaunchBox network, I truly think it gave us the concrete foundation needed to launch a successful product.”
GatewayUCC, an innovation centre based on the campus of University College Cork, operates SPRINT. This accelerator programme is co-sponsored by Enterprise Ireland and focuses on bringing UCC-generated technologies to market. The scheme is open to UCC researchers, entrepreneurs and early-stage companies. The SPRINT programme runs over a three-month period. Each participant is assigned a dedicated, industry-specific mentor and exits the programme with a strategy for the year ahead.
Competitive Start Fund
Although not strictly speaking an accelerator, Enterprise Ireland’s Competitive Start Fund (CSF) uses a similar approach. The fund of €50k (for a 10% ordinary equity stake) aims to help innovative companies reach key commercial and technical goals. Participants should have the potential to become High Potential Start-Ups (HPSUs) and can expect assistance in securing third-party investment and bringing products/services to international markets.
A bright future for Irish accelerators
Ireland already has an exciting selection of accelerator programmes, providing fertile ground for entrepreneurs to connect with investors. With increased government funding and successful track records, accelerators are set to play a progressive role in the future of Irish startups. Accelerators offer the opportunity to tap into the experience and resources of industry leaders and venture capitalists. But they are also dynamic environments that feed creativity, and many graduates find the experience of working alongside other founders just as valuable – with benefits such as collaboration, troubleshooting and insights.