In the UK alone, there are nearly 200, by some counts even 300, accelerator programs, with a soaring 75% year-on-year startup participation increase. While some argue that the market for accelerators is saturated, many areas have managed to remain highly diverse.
Oliver Rätsep, Accelerate Estonia’s Head of Business Development, joined Cristina Lisii (The Royal Academy of Engineering) and Bartosz Wawrzynów (FNP Ventures) as well as host Fabio Bianchi in Oxentia’s two-part podcast, delving into the burgeoning market of accelerators and the necessity of specialization in the field.
Here’s a quick summary of the interview.
No matter the market, specialization is key
Podcast guests agreed that in order to thrive, the accelerator market must retain its current heterogeneity. While Estonia and Poland may not match the scale of the UK accelerator market, specialization remains equally critical, as it is essential to provide each type of business with the optimal testing and growth environment.
To this end Bartosz Wawrzynów, Portfolio Manager at FNP Ventures, emphasized that Europe’s success with accelerators hinges on knack for a specific industry. “There is no universal enzyme for reactions, right? Specific reactions require specific catalysts,” he stated. This approach allows accelerators to offer customized support, provide access to industry-specific markets, and, importantly, gain a competitive edge in the accelerator landscape.
What’s the use of an accelerator beyond the obvious?
Whether it’s signaling, by way of due diligence, which start-ups are worth investing into, boosting founders’ confidence and assisting them with various administrative challenges or developing an innovative ecosystem – a successful accelerator, in the eyes of Cristina Lisii, Senior Programme Manager at The Royal Academy of Engineering, extends beyond what is offered to the specific venture.
Accelerators are able to connect different players, supporting various providers and providing valuable insights and research publications. Rätsep concurred, emphasizing that accelerators build essential connections with investors, potential partners, sales channels, and more, referring back to the old proverb: “If you want to go fast, go alone, but if you want to go far, go together.”
Rätsep elaborated that while many accelerators typically focus on supporting individual ventures, there is great potential in expanding a programme’s sphere of influence by actively shaping the broader surrounding ecosystem.
As an illustration, Accelerate Estonia, a governmental innovation programme, provides a distinctive edge by addressing obstacles in the local legal system. This means that companies facing regulatory hurdles, while seeking to transform innovative ideas into new markets, are invited to Estonia to test out their solution. In the best case scenario, whether it’s a business case, idea, product, or service, the solution is sufficiently validated to the public sector and the project will result in regulatory barriers being removed. Implementing such a validation system also facilitates expansion into other regions.
Founder-led accelerators versus government-funded accelerators
While some accelerators base their organization on founders and investors only, those backed by government funding also play a crucial role, particularly when targeting specific niches. “I do see the role of government funding in specific accelerator programs. Obviously the government wants to invest in strategic industries and innovations and see growth in those areas,” stated Lisii.
Moreover, some countries could, within themselves, be viewed as testbeds or incubators due to their tight-knit communities creating a unique, collaborative environment.
“Estonia can be seen as one big accelerator because it’s such a small country with only 1.3 million people, meaning everyone knows everyone. Whether you join an accelerator or approach a VC fund, the startup community in Estonia is very tightly knit.”
Oliver Rätsep
The whole country operates like a startup: agile and digital.
“Usually the government just plays catch-up with technologies,” Lisii noted from her experience in working in government, where regulation tends to follow rather than anticipate technological advancements, especially in fields like AI. This highlights the necessity for proactive government actions, which facilitate the opening of new markets. “It seems like a very good model to try to adopt wherever is possible,” she added.
Sell before you make – a sustainable model?
Podcast guests also discussed how accelerators’ proactivity in marketing must always be backed by a confidence that the team is able to deliver. Wawrzynów backed the “Sell before you make” type of operation, whereby a company’s solution is ready to pitch, but is yet to exist beyond bullet points on a powerpoint. Nevertheless, guests agreed that these cannot remain as empty words – the “sell before you make” strategy can only exist if it is backed by a highly capable and performing technical team, who is ready to bring the concept to a market in a very short span of time.
However, is such a model sustainable in the long term?
Host Fabio Bianchi found there might be an alternative, a potentially more sustainable approach, especially in highly regulated sectors. This alternative could be something along the lines of Accelerate Estonia’s mission: before “selling”, the functionality of a new product or market is proven through an initial pilot or MVP testing. Rätsep added that indeed, in order to get public sector support, selling in itself is not sufficient, as concrete cases, in the form of a pilot for example, are necessary to secure support for entering new markets.
Did this sound interesting? Have a go and enjoy a longer listen of the discussion on Oxentia’s two part podcast Bringing new ideas to life.
Facing legal hurdles such as the ones described in the article? Take a look at our Apply section and see if Accelerate Estonia’s team might be of help.