Can Accelerators Spur Global Development?

Business accelerators are hot new thing in economic development. Here in Washington DC, it seems like a new accelerator is opening for business every day, and investors across the US warn of a potential “accelerator bubble.”

Meanwhile, the accelerator concept is gaining traction overseas and is being actively deployed as a strategy for developing innovative approaches to global development.  A new Aspen Network for Development Entrepreneurs report provides an early inventory of what’s happening in the world of impact investment-related accelerators.  These accelerators hope to spawn and grow impact enterprises that bring new approaches to combating poverty and other social problems.  These enterprises are targeting what some researchers refer to as “The Pioneer Gap,” the myriad challenges facing entrepreneurs who are seeking to address pressing social problems while also pioneering new business models.

So how are these impact accelerators faring?  The report surveyed 52 organizations currently running impact accelerators in facilities located around the globe.   The field is growing and there is some evidence of success to date.  But, most of the backed ventures are in their early stages and are not yet generating much revenue or extensive impact. Also,  most of the accelerators still rely on close ties with philanthropy, with philanthropic investments accounting for more than half of operating funds. In addition, better data on financial performance is needed.  However, some early numbers are promising. For example, older, more established (before 2008) accelerators are performing fairly well, with roughly 80% of their mentored enterprises still in operation.

This study offer a good baseline assessment of what is a very promising approach to development.  As the report concludes, impact accelerators need to do a better job of tacking performance and building links to private investors.  But, trends are moving in the right direction and actually look quite similar to the US experience with business incubators and accelerators.   Until quite recently, most US incubators relied on public funding and/or philanthropic support—just as impact accelerators do today.  Over time, a more diverse mix of organizational forms and funding streams will develop, and in the process, greater impacts for enterprises and communities should follow.

 

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