Localising entrepreneurial ecosystems: an analysis on accelerators

This blog post is part of a series of  real-time blogs, which review and reflect upon the ideas and discussions which have surfaced during the sessions which GLI team members have been present at during the GEC.

In this blog post Ziyu interrogates the discussions at the ‘What’s next in Accelerators?’ session held at the GEC.

By Ziyu Huang

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The number of accelerators in the world has seen a tremendous increase ever since the birth of Y-Combinator, the first accelerator in the modern era, in 2005. From data collected by Kauffman Foundation (2015), there are more than 200 accelerators in the world. But what is an accelerator?

Amisha Miller, Senior Program Officer in Entrepreneurship of Kauffman Foundation, gave a few indicators to understand the characteristics of accelerators during the session at the What’s next in accelerators? at the Global Entrepreneurship Congress 2016. The areas listed were: fixed term, cohort-based (meaning startups under them enter and leave at the same time), provide mentorship and education, and culminate in public pitch events. The key question then is what happens to entrepreneurs as the number of accelerators all around the world increases ever so quickly?

One undisputable outcome is that more startups could obtain the opportunity to be chosen by accelerators. However, that is not without a cost. “Companies of lesser promise are gaining acceptance, and often funding, and the quality of mentoring in the programs has decreased,” noted Patrick Clark (2013) in a Bloomberg article. Therefore, the most salient problem becomes quantity versus quality. For individual entrepreneurs who gained access to accelerator programmes, they may find themselves in a sticky situation where the results of the programme are not conspicuous enough for them to stay on but due to one reason or another, they are not able to exit immediately. On a larger scale, there may be problems with having larger quantities of startups with arguable capacity for sustainability.

Another problem faced by both accelerators and entrepreneurs is that of disparities between countries. During the session for accelerators, one of the biggest concerns raised was the lack of a standardised method which answers all questions asked by various accelerators all around the world by making comparisons. Saurabh Lall, Research Director of Aspen Network of Development Entrepreneurs, emphasised that there is a wide range of models for accelerators depending on their type (governmental, corporate, non-profit, etc) and country. In developing countries, their models are very much different from those of the United States and Europe. For instance, they could have the same practices with regards to the cohort system and the duration of their programmes, but they would require more flexibility in other areas to suit the unique characteristics of their countries.

The point about having different needs from accelerators in different countries was nicely illustrated by Ivan Sandjaja as I interviewed him outside of the session for his view of the entrepreneurial ecosystem in Asia. He is the Director of Ciputra Incubator and Accelerator, Office of International Relations of Universitas Ciputra Entrepeneruship Center, a member of the Global Entrepreneurship Network in Indonesia. He explained that in developing countries, most entrepreneurs do not need a technological accelerator because they do not require a co-working space which is more useful for game developers. Instead, they would require non-tech accelerators which provide innovation workshops because most startups in Indonesia involve handicraft and other types of manual work but lack continuous innovation to keep their businesses running in the long term. Even if they do, their businesses would remain small or even smaller, which makes them ‘micro businesses’.

Over all, as the entrepreneurial ecosystem contains a diverse set of individuals and backgrounds, how entrepreneurs position themselves in their local ecosystem depends on how much they understand the layers of relationships between key players within the ecosystem. As Donna Harris, co-founder of 1776, shared during the accelerator session, there are 3 inseparable layers: the ecosystem layer, the venture layer and the entrepreneur layer. For the accelerators who are facing vigorous competition, they have to consider their relevance locally and globally. The question of how accelerators can be understood or compared still remains. For the entrepreneurs, they still have to go back to their basics in order to succeed: structure, rigour and continuous innovation. In Sandjaja’s words, “You have to keep innovating because the moment your idea comes into light, there will be people copying your idea. So you have to maintain the lead. It’s an ongoing process.”

References:

Clark, P. (2013) ‘Waiting for the Accelerator Bubble to Pop’, Bloomberg [Online] Available at: http://www.bloomberg.com/news/articles/2013-03-14/waiting-for-the-accelerator-bubble-to-pop [Accessed 16/03/2016]

Tomkins-Bergh, C. (2015) 3 Emerging Trends in the Accelerator Model [Online] Kauffman Foundation. Available at: http://www.bloomberg.com/news/articles/2013-03-14/waiting-for-the-accelerator-bubble-to-pop [Accessed 16/03/2016]

About Ziyu:

Ziyu is a Sociology (BA) student at the University of Sheffield,  and is currently doing her dissertation on entrepreneurial inclinations. She has a keen interest in research and activities related to entrepreneurship and believes in the future of entrepreneurship for a better world.

 

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