Our Accelerator programme supports ventures doing social good, and still delivers better commercial results than most conventional business incubators. Since the program, our 2012 intake had an average of 343% growth, over £75,000 worth of additional investment per venture, and the course delivered a 90% business survival rate. Stuart Thomason outlines five key ways we’re achieving these results.
Firstly, let’s talk about misconceptions. Social ventures are driven by a social mission and have a viable financial model at their core. We support ambitious social ventures who want to scale up their impact and create a sustainable business.
When I pitch our social incubator model I can feel people don’t quite get it, so I open any discussion with evidence that the revenue growth achieved by our social ventures exceeds that of most conventional business incubators in the UK and Europe. Then I talk about social impact – how our ventures have been able to impact upon 289,000 people in a positive manner.
Yet I am still asked – Is it really possible to take financial investment and do ‘good’?
The answer for me is clearly yes. However, I can anticipate at least one sceptic in the audience will at this juncture still raise two points:
(1) I imagine you are using state aid to subsidise these businesses? And (2) these must be later-stage ventures, not risky early-stage unproven innovations?
Interest levels rise dramatically when my answer to both questions is no.
(1) We have a commercial funder in J.P.Morgan supporting our approach and we expect commercial returns. (2) Over half of our social ventures joined us with revenue under £100k none of them had a business model that stacked up.
So how are we doing this? What makes the Accelerator so different to a conventional incubator? Here are my 5 ‘top tips’ for designing a programme that works:
- Focus on impact first. Does this venture have a social mission at its heart? Is there potential for it to tackle the root causes of inequality and is it challenging the current status quo? If the answer is yes – back it relentlessly.
- Back them with people not money first. Great entrepreneurs build great teams. Forget the myth of the heroic social entrepreneur and find them the best mentor, financial coach and specialist sector insight. Don’t worry about friendships either, focus on skills.
- Get passionate (if not a little obsessive) about the underlying business model. What generates value for ALL stakeholders and how can this be maximised so beneficiaries, contractors and investors all see a tangible benefit from the venture? If they can’t articulate their social value proposition after a month – you have failed.
- Work in-depth and at pace. We chose not to build another trendy east-London incubator space. We upcycled some wood, blagged some paint and ensured our ventures spent time understanding their market, not office politics. We also only give them 16 weeks to work it out.
- We ensure the right people attend our demo days. With a panel of angel investors, social investors, buyers and donors we ensure investment matches the need for each venture.
We also add in a lot of personality ourselves. Our team follow up on behalf of each venture to ensure the investors understand their business model. We make personal introductions over coffee and cake to like-minded souls who want to make a difference.
For me, conventional incubators appears stuck in the venture capital mind-set that only 1 or 2 ventures will make it, and go about setting investor expectations accordingly. Frankly we expect them all to make progress and to make the world a better place.
The good news is these ventures are making this dream a reality.
Read about the impact of the first Accelerator cohort, or