2. Content
1) Introduction
2) Why
Create
an
Incubator,
Accelerator
or
Co-‐Working
Space
3) Incubators
4) Accelerators
5) Internal
Corporate
Accelerators
6) Co-‐Working
Spaces
7) Creating
your
own
Incubator,
Accelerator
or
Co-‐Working
Space
3. Introduction
Over the past 10 years we have seen a significant rise in the number of
Incubators, Accelerators and Co-‐working Spaces cropping up across the globe.
This has largely been due to a rise of investment in the startup scene, driven
predominantly by innovations in the mobile, online and digital space.
Incubators and Accelerators aim to help startups mature to a point where
they are viable to attract significant investment. They are very selective in the
Startups they accept because their main source of income is based on an
agreed share of future profits generated by the startups which become
successful businesses.
Co-‐working Spaces have also become a lot more common due to the rise in
the Startup scene, as small businesses seek to work in shared work
environments which are cheaper than dedicated office space.
As we enter the so called ‘4th
era of Innovation’ corporates are feeling a great
necessity to Innovate. Large corporates, in their aspiration to innovate like
startups, have realized that they can leverage the lessons, tools and
methodologies developed in the Startup scene to drive their own innovation.
As a result corporates are developing Internal Corporate Accelerators.
The following deck is intended to introduce you to some of the common
concepts which are fundamental to these different Programmes. In this fast
moving age of Innovation it is critical for any aspiring entrepreneur or
business to be aware of and understand this particular landscape.
Lets begin…
4. Why Create an Incubator, Accelerator
or Co-Working Space
There are various reasons why a business, government, research institute or group of entrepreneurs might
want to establish an Incubator, Accelerator or Co-‐Working Space. Below are just some of the reaons. The
reason or ‘the Why’ will ultimately dictate which Programme is adopted as well as the exact business model
developed. It is therefore important to start with theWhy.
A CSR Programme
Social Incubators and Co-‐Working Spaces are created
by company CSR programmes and governments in
order to empower and uplift under-‐developed
communities. They serve as platforms for
community members to work with mentors and
investors to identify opportunities and solve
problems whichexist intheir communities.
A
Semi
Independent
Corporate
Capability
to
Focus
on
Radical
Innovations
Businesses create Corporate Incubators
and Corporate Accelerators to create an
innovation capability free from the
beuroctratic and BAU contraints of the
parent Company. This gives them the
necessary freedom to take calculated
risk and be measured against a different
set of performance indicators.A Business
Because you see it as a business opportunity and you
are passionate about empowering promising
bussinesses and entreprenuers. Well run Incubators
and Accelerators can be highly succesful businesses.
Uber and Linkedin are well known examples of
companies which came out of Acclerators which are
now highly respected and succesful in their own
right.
Drive
Growth
and
Economic
Prosperity
Incubators, Accelerators and Co-‐Working
Spaces are often set up in specific
locations as part of a strategy to drive
growth.
5. Incubators
Incubators run time-‐boxed programmes for promising young startups. The application process to get into an Incubator is
usually very competitive. Incubators work with the startups in their programme to get them to a point where they are ready
and worthy offurther investment from a network of Angel Investors which is associated with theIncubator.
Tip
1
Adapt
the
model
to
the
realities
of
your
region,
if
none
exist,
build
a
new
one.
Tip
2
Acquire
the
best
expertise.
You
will
be
shaping
peoples
lives.
Tip
3
Establish
a
healthy
‘online’
&
‘offline’
network
of
Investors
and
Entrepreneurs.
Angel&Investors
StartupSeed$Funding
$10,000.
$20,000
Initial$
Equity$
+/. 6%
Share$of$
Initial$Equity
Fee$for
access
Angel&InvestorsStartup
Angel&Investors Startup Mentors
Salary
Incubator
Successful&Startups
Receive&further&Investment
Angel$
Investment
Further$Equity$
Share Negotiated
Incubator&Cash&and&Equity&Flow
1.$Startup$gives$up$initial$equity$to$Incubator$+/. 6%
2.$Angle$Investors$Pay$Incubator$to$get$access$to$Startups$at$
the$end$of$the$Incubation$Process
3.$Share$of$initial$equity$given$by$all$the$startups$allocated$to$
Angel$Investors$
4.$Seed$funding$given$to$Startups$to$develop$their$business$ in$
the$incubator$$10,000$. $20,000
5.$Depending$on$whether$Mentors$are$volunteers$or$
employees$they$will$be$paid$a$salary
6.$Startups$who$manage$to$secure$Angel$Investment$after$
from$their$time$in$the$Incubator$give$up$further$Equity$to$
Angel
1 2
3 4 5
Mentorship
Workshops
Hackathons
Exposure&to&Network
Value&Proposition&of&Incubator
. Mentorship$to$early$stage$start$ups$and$
entrepreneurs.$
. Developing$startups$to$the$point$where$their$$
business$ ideas$are$eligible$for$Angle$Investing.$
. Delivering$Investment$Ready$Propositions$ to$
Angel$Investors
Methodologies&Used
. Lean$Startup
. Customer$Development$Cycle
. Minimum$Viable$Product$Development
. Rapid$PrototypingCash$Flow$&$Equity$out$of$Incubator
Cash$Flow$&$Equity$into$Incubator
6
3I6&Month&
Programme
6. Accelerators exist to catapult late-‐stage startups, whether they have been incubated or not, to exceptional heights.
Through an intense programme they help prepare startups for ‘Series A’ funding which is usually provided by Venture
Capitalist firms. There is a far greater focus on Business development in Accelerators as compared to concept
development during incubation.
Accelerators
Tip
1
Ensure
you
are
tapped
into
online
platforms
where
VC
firms
can
find
you.
Tip
2
Ensure
that
Startups
have
at
least
one
paying
client
by
the
end
of
the
Accelerator
to
prove
that
it
is
client-‐ready.
Tip
3
Ensure
your
Accelerator
has
adequate
resources
to
enable
the
rapid
development
of
Startups.
VC#Fund
Startup
VC#Funds
Late#Stage#
Startup
Late#Stage#
Startup
Mentors
Some%pay%
Mentors,%others
Don’t.
Accelerator
Successful#Startups
Receive#VC#Investment
VC%Investment
Further%Equity%
Share%and%Profits%
Based%thereupon
Accelerator#Cash#and#Equity#Flow
1) Take%Equity%from%Startups%accepted%into%Programme
2) Receive%a%Management%Fee%from%the%funds%linked%to%the%
Accelerator
3) Capital%is%provided%to%startups%to%develop%during%
Accelerator%Program
4) Payment%of%Overheads%such%as%Mentors%and%Premises
5) Startups%which%receive%further%VC%funding%give%up%
further%equity%to%VC%fund.%Those%which%go%on%to%be%
successful% share%profit%according%to%equity%shares%to%VC%
and%back%to%the%Accelerator.
1 2
3 4
Value#Proposition#of#Accelerator
P Provide%Startup%with%Credibility%by%virtue%of%
its%participation%in%the%Accelerator.
P Help%Startup%develop%their%pitch%to%
Investors.
P Prepare%Startup%for%its%first%Customer
P Provide%Startup%with%Legal%advise%including,%
due%diligence,%Intellectual%Property,%Term%
Sheet%Negotiations,%Valuation.
P Provide%VC%firms%with%viable%and%mature%
Startups,%ready%for%Series%A%funding.
Cash%Flow%&%Equity%out%of%
Accelerator
Cash%Flow%&%Equity%into%Accelerator
5
3#Month#
Programme
Business#Mentorship
Workshops
Exposure#to#VC#Network
Often%VC’s%
demand%
a%seat%at%the%
table%of%a%
startup
Fund#Managers
+/P20%%of%
Funds%gains$18P$20,000%
Capital%provided
Management%
fee
Accelerator
Profit%or%‘Exit%
Share%’According%
to%Initial%Equity%
Share
7. Internal Corporate Accelerator
The Internal Corporate Accelerator is a special class of Accelerator. It is formed as a semi-‐independent function of a parent
company and is focused on generating ideas, testing these ideas using methods such as rapid prototyping and the customer
development cycle and then further developing successful prototypes into products and sometimes separate businesses.
Corporateaccelerators should operateas semi-‐independent entities, free from the daily constraint ofBusiness as Usual (BAU).
Tip
1
Must
ensure
that
corporate
accelerator
is
well
networked
outside
of
the
parent
organization.
Tip
2 Funding
for
projects
should
be
appropriately
sized
at
different
stages
of
development.
Not
too
much
and
not
too
little.
Tip
3
Ensure
that
the
leaders
and
Mentors
allocated
are
the
right
people
for
the
job.
This
may
require
external
hires.
Value
Proposition
of
Corporate
Accelerator
-‐ A
structure
relatively
free
from
the
day
to
day
constraints
of
BAU
-‐ A
place
to
test
ideas
and
fail
fast
-‐ New
streams
of
revenue
from
spinoff
products
and
businesses
-‐ Enables
the
realisation
of
an
innovation
mandate.
-‐ Radical
and
disruptive
innovation
-‐ Give
an
organisation
the
ability
to
adopt
the
lessons
learnt
from
the
startup
sector
to
drive
and
implement
new
ideas.
Methodologies
-‐ Rapid
Prototyping
MVP
-‐ Customer
Development
Cycle
-‐ Lean
Startup
Internal(Corporate(Accelerator
Parent(Company
Portfolio(of(spinoff(products(and/or(businesses
Dedicated(Budget(Allocated
(Accelerator(can(motivate(for(more)
Incubator(given(relative(freedom(
to(allocate(between(projects
Share(of(Profits
reinvested(in(
Accelerator
Share(of(Profits(Taken(
by(Parent(Company
8. Co-working Space
Co-‐Working Spaces are about creating a vibrant community for small businesses and entrepreneurs where
they can work and if desired network and collaborate with each other. Co-‐working spaces provide all the
infrastructure and services of a fully equipped office space. These resources are shared by the occupying
entrepreneurs and business who all pay rent to theowners of thespace.
Tip
1
Engineer
the
facilities
and
services
on
the
real
needs
of
the
local
entrepreneurial
community.
Tip
2
Geographical
Location
is
critical.
Ensure
it
is
located
near
an
existing
community
of
Entrepreneurs
or
has
good
transport
links
Value
Proposition
of
Co-‐working
Space
-‐ Bringing
creatives
and
business
people
together
to
create
a
vibrant
multidisciplinary
community.
-‐ Some
have
a
focus
on
social
upliftment,
in
which
case
they
provide
a
shared
office
&
or
studio/workshop
infrastructure
that
would
otherwise
be
lacking
in
the
community.
-‐ Provide
local
community
of
Entrepreneurs
with
Seminars,
Workshops,
training,
networking,
hackathons.
-‐ Hot
desks
for
daily,
weekly,
monthly,
annual
rental.
Tip
3
Offer
services
based
on
the
real
needs
of
the
entrepreneurial
community
Co-‐working
Space
Cash
Flow
1) Co-‐working
Space
receives
rental.
2) Some
Co-‐working
Spaces
receive
Subsidization
3) Main
expense
for
a
Co-‐
Working
space
are
overheads
Co#working*Space
Government*or*Corporate
Business,
Entreprenuer,* Freelancer
Overheads
Some*Co#working*
Spaces*are*subsidised*
but*usually*they*
are*private*and*
independent*
businesses
Rental*+*Service*Fees
Seminars
Workshops.
Training.
Hackathons
Rental,*Staff,*
Essential*Service
1 2
3
9. Creating your own Incubator, Accelerator
or Co-Working Space
Create
a
model
for
your
local
context
It is important to recognize that the exact
business model which you use and value
proposition you offer should fit the constraints,
challenges and opportunities of your available
network of stakeholders. You cannot simply cut
and paste a successful model from elsewhere in
the world and expect it to work.
Create
a
clear
vision
and
plan
-‐ Ensure
you
have
a
good
value
proposition
for
all
stakeholders
involved.
-‐ Design
your
model
and
Business
plan.
Include
a
good
Digital
Strategy.
-‐ Assemble
the
appropriate
capabilities:
business
analysis,
prototyping,
Technical
capabilities,
Entrepreneurial
Credibility
and
Industry
Experience.
-‐ Build
a
strategic
network
of
Entrepreneurs,
Investors
and
Educators.
Grow
organically
In the case of Corporate Accelerators It is always best
to start with at least one project identified as having
high potential and developing an accelerator around
it. Allocate the relevant people and team to optimise
success. Thereafter allow the accelerator to grow
organically according to what works and what
doesn't’t. Do not make the mistake of thinking that
by creating a magnificent space, great ideas will
necessarily follow and be successfully accelerated.
This almost never happens
Work
hard
to
find
the
right
people
to
work
with
you
in
creating
a
success
The
strengths
of
your
partnerships
will
define
your
success.
Reputation
is
key
to
the
success
of
Incubators
and
Accelerators.
Get
in
contact
for
advise
on
how
we
may
be
able
to
assist
you
in
creating
an
Incubator,
Accelerator
or
Co-‐
Working
Space.
Tel:
+27
11
463
2205
10. Contact
us
24
Peter
Place,
Lyme
Park,
Bryanston,
2191,
South
Africa
Tel:
+27
11
463
2205
Email:
ia@innovationagency.com
