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European Accelerator Report 2015 - Fundacity

#EuropeanAcceleratorReport

The region

Startup accelerators play a major role in today’s tech world and new accelerator programs are launched almost everyday. According to Natty Zola (TechStars, MD) they became, “a proven way to quickly grow a startup by learning from experts, finding great mentorship and connecting to a powerful network. They provide resources that reduce the cost of starting a company and the early capital a team needs to get their venture off the ground or to achieve key early milestones. They have become the new business school.” In many ways, accelerators have become a rite of passage for thousands of entrepreneurs across Europe and around the world.

The European Accelerator Report 2015 from Gust and Fundacity provides an exclusive inside look at accelerator programs in the countries across Europe. This report is a follow-up on the 2014 Accelerator Report and its objective is to understand how the accelerator industry has developed in the region, how accelerators are funded and monetized, while providing insights on the direction of the industry in the near future.

To create this report, we surveyed 237 organizations out of which 113 qualified as accelerators and shared their data with us.

Total investment in the region

€37,533,632

in 2574 startups

by 113 accelerator programs

    • Top countries by investment

    • United Kingdom

      €9,992,752

    • Denmark

      €4,820,000

    • Spain

      €4,654,929

    • Germany

      €3,293,183

    • Italy

      €2,290,000

    • Top countries by investment

    • United Kingdom

      €9,992,752

    • Denmark

      €4,820,000

    • Spain

      €4,654,929

    • Germany

      €3,293,183

    • Italy

      €2,290,000

  • 1124

    263

    219

    156

    126

    100

    84

    73

    59

    58

    57

    40

    39

    29

    26

    26

    23

    19

    15

    10

    10

    9

    6

    3

    Latinamerica

    Acceleration map

33

Startup Exits Reported by accelerators in 2015

TOP 10 SEED ACCELERATORS

By capital invested

    • Denmark

    Accelerace

    €4,700,000

    Denmark | Mix fund

    • Europe

    Wayra

    €2,509,802

    Europe | Private fund

    • Bulgaria

    Eleven

    €2,000,000

    Bulgaria | Public fund

    • Europe

    Startupbootcamp

    €1,375,500

    Europe | Private fund

    • United Kingdom

    Collider

    €1,356,610

    United Kingdom | Private fund

    • United Kingdom

    Ignite

    €1,139,550

    United Kingdom | Private fund

    • Germany

    Hub:raum

    €1,000,000

    Germany | Private fund

    • Lithuania

    Startup.lt

    €1,000,000

    Lithuania | Public fund

    • Spain

    Plug and Play Spain

    €1,000,000

    Spain | Private fund

    • Spain

    La Salle Technova Barcelona

    €1,000,000

    Spain | Private fund

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EVOLUTION OF THE ACCELERATOR INDUSTRY IN THE REGION

  • New accelerators

  • Year

  • Launched in 2007, Seedcamp is considered by many to be the first “Y Combinator style” European accelerator. (Note: Today, both Y Combinator and Seedcamp have expanded and changed their program offerings, and now consider themselves to be seed funds, a distinct group from accelerators)

  • Between 2009 and 2015, the number of European accelerators grew consistently year-over-year.

  • Both private and public interest and investments in the startup industry fuel the growth of accelerator programs in the European region. The number of new European accelerator launches peaked in 2015, but new accelerators continue to launch at a high rate compared to other regions' accelerator program growth.

  • Out of the 26 accelerators launched in 2015, fourteen of them are focused on specific niche markets, including Health, Real Estate, Food, Media and many others.

PROFIT OR NOT-FOR-PROFIT?


  • More than 2/3 of European accelerators are for-profit ventures. Typically, for-profit accelerators are funded with private capital by investors who aim to generate profit in the long-term, mainly through startup exits (acquisitions, IPOs) within their portfolio.

  • Not for-profit accelerators generally do not take equity, and tend to focus on industries with a specific public benefit, such as Health Tech and Edtech. They may also focus on providing new opportunities for minority groups. They may be either privately or publicly funded.

  • For-profit
  • Not-for-profit

SOURCES OF FUNDING


    • 100% Private funding

    • 100% Public funding

    • Mix of both (Public/Private)

    • Other sources


  • Accelerators stimulate growth of companies and this leads to job creation. In addition, they lead to innovations that can solve important problems faced by society both locally and globally.

  • Accelerators are difficult to monetize and fund in the short term (within 12 months) because early stage ideas usually require many years before they provide returns to shareholders. To support this period of growth, governments around the world provide subsidies and grants to stimulate new accelerators and help them operate.

  • The European Union and many local governments within the EU are closely involved in growing their innovation economy and strengthening their startup ecosystems. For example, the European Commission commits an annual €850MM worth of funds into EU startup ecosystems and this includes the program FIWARE Accelerator Programme, which specifically targets 80MM in 2014-15 to support web entrepreneurs, SMEs, and startups.

  • In Europe, 27% of accelerators reported that they either received a mix of private and public funding or were 100% publicly funded.

  • 56% of EU accelerators declared to be funded only with private capital. These accelerators are usually funded by high net worth individuals, angel groups, private investors (angel groups, VC investment funds) and corporations. These investors hope to make a profit through positive startup exits (acquisitions, IPOs etc..) and having early access to high potential tech companies.

HOW DO ACCELERATORS GENERATE REVENUE?


    • Short term

    • Long term


65% of accelerators in Europe are for-profit. How do they generate revenue?

  • Many European accelerators follow the traditional “cash for equity” model, first established in 2005 by Y Combinator. In exchange for investing a small amount of seed money into a startup (around $25,000 on average), accelerators will receive equity in the startup (usually between 5% and 10%).

  • 21% of european accelerators plan to earn revenue from startup exits within the short term (within 12 months) and 60% of plan to earn revenue from startup exits over the long term (12 months or longer)

  • Since cash flow is typically re-invested by startups to grow the business rather than pay dividends and exits usually do not occur earlier than 3 - 5 years into a startup's lifecycle, accelerators generally would not make a profit on investment for several years. To make up for the expensive day-to-day upfront costs of operating their programs, accelerators have recently begun exploring new models that allow them to generate revenue. These alternatives include mentorship fees, renting out office space, hosting events, and corporate sponsorships and partnerships.

  • 97% of European accelerators plan to increase their revenue in the short-term by incorporating alternative revenue models apart from exits.

  • Similar to other regions in the world, a large number of European accelerators rely on corporations for revenue generation. 58% of the accelerators surveyed reported that corporate partnerships are an important revenue channel in the short term (within 12 months) and 52% in the long term (greater than 12 months). Similarly, corporate sponsorship also plays an important role for accelerator revenue generation: 56% of accelerators reported relying on corporate sponsorship in the short term and 43% in the long term.

  • We predict that the relationship between accelerators and corporations will grow significantly in Europe. An increasing number of corporations - both large and mid-sized - are looking to startups as a source of innovation to help improve operational efficiency. Startups are also increasingly looked towards for new or differentiated products that they can bring to market.

TOP 20 ACTIVE ACCELERATORS

By number of startups accelerated in 2015

    • Country

    • Accelerator

    • Startups accelerated in 2015

    • United Kingdom
    • Entrepreneurial Spark

    • 660

    • United Kingdom
    • MassChallenge

    • 90

    • Europe
    • Startupbootcamp

    • 86

    • Austria
    • IMPACT HUB Vienna

    • 74

    • France
    • Euratechnologies

    • 52

    • Europe
    • Microsoft Ventures

    • 48

    • Spain
    • IMPACT Accelerator

    • 42

    • Portugal
    • Fábrica de Startups

    • 35

    • Spain
    • La Salle Technova Barcelona

    • 30

    • United Kingdom
    • Accelerator Academy

    • 30

    • Germany
    • Axel Springer Plug and Play Accelerator

    • 29

    • Netherlands
    • Rockstart Accelerator

    • 29

    • Germany
    • Climate-KIC Accelerator

    • 28

    • United Kingdom
    • Bethnal Green Ventures

    • 27

See the full list

    HOT MARKETS

    in the region for the 2016

    % of accelerators that reported an interest in investing in these markets in the next 12 months

    • Internet of things

      77%

    • Saas

      72%

    • Fintech

      65%

    • Mobile apps

      65%

    • Big data analytics

      63%

    • E-commerce

      59%

    • Health

      55%

    • Cloud services

      50%

    • Wearables

      49%

    • Education

      41%

    • Cleantech

      35%

    • Social media analytics

      35%

    • Others

      35%

    • Adtech

      34%

    • Drones

      27%

    • Biotech

      26%

    • Market.realestate

      19%

    The universal prominence of Internet of Things as a market focus, is also true for accelerator programs in the European region. 77% of the accelerators reported an interest in investing in startups within this field, an increase from 61% in 2014. As compared to 71% of European accelerators having an interest in investing in the Mobile Apps' market in 2014, interest has fallen to 65% in 2015.

    THE LOCAL INSIGHT

    "How do you think accelerators in your country are doing compared to the rest of the world's accelerators and what competitive advantages do you think they have?"

    • Andy Tait - Collider
    • Andy Tait

      Collider (United Kingdom)

      We see continued growth in the UK accelerator scene based around a few factors. The first factor would be the multi-level needs of major corporate players. A growing number of them has already appeared to be engaging with accelerators. Each of these players has different objectives and requirements. For many of them, it is a step into the unknown, even if there is some internal innovation function. Not only can working with startups bring bottom-line impacting technologies, it might even encourage a cultural impact which is impossible to replicate internally.

      The second factor would be access to capital. Individual UK tax payers benefit greatly from investing in early stage startups, where they are approved under the SEIS (Seed Enterprise Investment Scheme) rules. Until recently, it was only a trial scheme but it has been made permanent now. Individuals can invest directly or invest in specialist funds. Either way, it helps mitigate the risks of investing in startups.

      The final factor is startup demand. For young people who possess the drive of a true entrepreneur and do not want a job on the corporate treadmill, the visibility of startups - particularly the more successful ones - makes it a great choice to actually go out and build something.

      Adding the above factors together: corporate need, capital and startup demand, you have a thriving and growing ecosystem.

    • Ricardo Marvão - Beta-i
    • Ricardo Marvão

      Beta-i (Portugal)

      In the past years, Lisbon has been growing exponentially as a startup hub, attracting more investments for its fast growing startups every year. These investments are usually made by European and USA angels and venture capitalists. Furthermore, with a huge influx of national talent returning back to Lisbon, foreign talent seeking a cool place with a lot of potential to work in, the arrival of the WebSummit and all its visibility, Lisbon has now truly defined its recipe for success. Lastly, its main accelerator was the first stop to many of these initiatives and this makes it an amazing moment to be working in this wonderful city.

    • Ricardo Marvão - Beta-i
    • Frauke Mispagel - Axel Springer Plug and Play Accelerator
    • Frauke Mispagel

      Axel Springer Plug and Play Accelerator (Germany)

      Surpassing London both in number of VC investments and sum invested in 2015, Berlin is the place to be for any true European Accelerator. Here, we observe a continuous proliferation of venture capital with an increasing number of VCs making a move to the German capital. As a startup accelerator and pre-seed VC, this is something we are particularly happy about.

    • Ricardo Marvão - Beta-i
    • Romain Amblard

      NUMA (France)

      The French education system is producing an immense amount of talent, rushing to a booming startup sector. Then, encouraged by more VC financing options and truly global ambitions, early-stage acceleration scene acts as a launchpad to structure future tech champions, at a critical point : help build disruptive technologies, gain growth and traction, and find seed investments

    • Ricardo Marvão - Beta-i
    • Frauke Mispagel - Axel Springer Plug and Play Accelerator
    • Raouti Chehih

      Euratechnologies (France)

      Regarding French startup acceleration scene, we can consider France is doing better than last years, due to several things. First of all, the maturity and size of the national ecosystem, number of startups, number and level of fundings, exits, skills. France is reaching a serious critical mass.. Secondly, TALENT is everywhere, and french talents and creativity (engineers, designers,…) are amongst the most desired in the world. The Government has launched incentives like “The FRENCH TECH”, which are giving hope to every risk takers together with a good image of french tech scene. Money is available, not always at the good level of need but… balanced by smart mentors bringing their experience and expertise. Lastly, french entrepreneurs cansee stars raising as CRITEO, BLABLACAR, SIGFOX, WITHINGS acquired by NOKIA, CAPTAIN TRAIN, GIROPTIC and many more to come, sending positive message that building unicorns is possible from France.

    CONCLUSION

    Europe has experienced both strong and continued private and public sector interest and investment in the startup industry across the entire region. This has fueled the growth and strength of existing accelerator programs, while leading to the launch of new accelerator programs. In total, €37,533,632 was invested into 2,574 startups by 113 accelerators in 2015.

    The most active startup ecosystems in 2015 were also strong in 2014. The United Kingdom, Spain, Germany, and Italy continue to rank among the top five countries measured by the amount invested through accelerators and into startups. The new entrant into the top five in 2015 is Denmark, which increased its total investment by 2.5x to €4,820,000. Portugal is also a very active startup hub and continues to be the fourth most active in terms of number of startups that completed an accelerator program in 2015.

    Europe is experiencing a strong rise in vertical accelerators, which are focused on specific industry niches. From the 26 new accelerator programs that entered the market, 14 were focused on specific industries. This verticalization is driven by the growing number of corporations that sponsor or partner with accelerators to gain access to startups within their field. As a result, a greater number of core accelerator programs that focus on specific industries in parallel with their corporate sponsors or partners are launched.

    We are seeing a shift from the traditional exits-focused model towards a more diversified accelerator business model. European accelerators rely heavily on corporate partnerships and/or sponsorships to monetize. 78% and 64% of the accelerators relied on revenues from this channel in the short and long term respectively.

    THE REPORT

    • 237

      Institutions contacted

      85% more than 2014

    • 14O

      Replies

      27% more than 2014

    • 113

      Accelerators

      39% more than 2014

    • 24

      Countries

      7 more than 2014

    Due to a current lack of consensus on the exact definition of an accelerator, it was important to define as clearly as possible what an accelerator was to compile the report.

    We used the following definition from Miller and Bound (2011), who define accelerators as having the following 5 features:

    1) An application process that is open to all, yet highly competitive.
    2) Provision of pre-seed investment, usually in exchange for equity.
    3) A focus on small teams and not individual founders.
    4) Time-limited support comprising programmed events and intensive mentoring.
    5) Cohorts or ‘classes’ of startups rather than individual companies.

    To collect data, we reached out to two or more team members from each organization. Not all accelerators replied and thus our data is not complete. Organizations contacted were asked to confirm whether they qualify as an accelerator based on the definition above. The data itself was self-reported by the accelerators via an online form. Fundacity and Gust have neither audited the data nor request any supporting documentation.

    Accelerator programs by country

    • United Kingdom

      24

    • Spain

      21

    • France

      14

    • Germany

      9

    • Italy

      8

    • Netherlands

      7

    • Hungary

      4

    • Portugal

      4

    • Austria

      4

    • Finland

      4

    • Ireland

      3

    • Poland

      3

    • Denmark

      2

    • Lithuania

      2

    • Estonia

      2

    • Belgium

      2

    • Sweden

      2

    • Czech Republic

      2

    • Bulgaria

      1

    • Slovakia

      1

    • Slovenia

      1

    • Iceland

      1

    • Greece

      1

    • Ukraine

      1

    Report by

    • Gust

    Created By Sebastien Brunet, Miklos Grof and Diego Izquierdo

    Collaborators: Julien Tubbs, David Blake, Tina Glickman, Greg Young, Zigis Switzer.

    #EuropeanAcceleratorReport

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