TRENDS
Growing
start-ups
Tracking trends in the
incubation and acceleration
of UK start-ups…
T
he UK tech sector is in a state
of change. Brexit uncertainty,
talk of a funding bubble, and
a myriad of opposing opinions
have given founders reason to
pause and consider what is the best
business move to make next.
The role that small but high-growth
companies play in the UK economy is
starting to solidify. The PR pizazz of
David Cameron’s Tech Nation has
settled into meaningful business,
with meaningful consequences.
The winds of change blow also
through the makeup of the surrounding
ecosystem. The role of accelerators and
incubators in start-up development and
growth is the subject of new research
by Nesta [see p80]. For some, the role of an incubator
is arguably provided by shared working
environments such as WeWork or Runway
East, where office space and a community
provide companies with infrastructure
and social support.
Blurred lines D e f i n i n g va lu e
First, definitions. Traditionally,
accelerators offer start-ups a chance
to turbocharge their business progress
and growth. Incubators offer space
for companies to mature after this
initial growth stage.
Recently, however, there has been
a blurring of lines between these two
categories. The linear graduation from
incubator to accelerator is broken.
Gavriel Merkado, CEO of PropTech
start-up REalyse, voices an opinion
felt by many in the industry: “I kinda
thought they were the same thing”.
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Reluctance to enter an incubator can
come as a result of the confusing choice
of payment options. Founders have a
choice between paying cash and paying
equity. Or, to put it another way, pay
now or pay later. Offices take cash,
accelerators tend to take equity. Triin
Linamagi of Startupbootcamp suggests
that there are advantages to the latter:
“Taking equity aligns incentives,
everything else doesn’t. Young businesses
should avoid paying for any programme.”
The counter argument runs that
stripping founders of their equity