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Home What’s the difference between an accelerator and an incubator? Two letters and a sematic minefield.

What’s the difference between an accelerator and an incubator? Two letters and a sematic minefield.

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In the last few years both incubators and accelerators have grown in the tech scene almost like viruses. From the well-known ones like ycombinator, 500 Startups, TechStars and SeedCamp, to newer players like Wayra, Angel Pad and Springboard, the list seems to grow  daily.

I have been involved with a couple as a mentor and in one as an investor in the edtech start up Night Zookeeper. I work in education, not in delivery, but  the business end, which is a huge international market. To many educators and commentators I’m one of the bad guys, but I don’t mind because there is very little in this ‘secret garden’ isn’t supplied by people motivated primarily by the profit motive. Doubt it, then think about who provides the paint on the wall, the floor coverings, lights, heat, toilet paper, water, desks, chairs and the IT software and hardware used ins chools? None is made by a government, they just use our taxes to buy them from for-profit private companies (and if you want to fix something in education start with procurement because it stinks in almost every market).

For education start ups, most accelerators and incubators simply don’t work  because they lack sector knowledge (particularly amongst mentors) and this is something that is almost as valuableto an edtech start up as angle investors money.

For a few years there was only one specialist in this area, ImagineK12 in Silicon Valley. They pitch themselves as ‘not an incubator’, so I suppose they’re an accelerator, but the distinction seem tenuous. Imagine K12 are terrific, they really push teams  with edtech ideas to being investable propositions, with 70% of their alumni companies having raised money so far (13 of 19). I also rate several of their alumni including Chromatik, LearningJar, Bloomboard and ClassDojo. I spoke to Tim Brady of ImagineK12 last year about whether they were looking to expand outside the US and he said quite bluntly they had no plans to do so (not an unusual world view for many US edtech players and investors).

In the last 24 months investors have started to get more excited about edtech, first in the US and now in Asia, Latin America and to a lesser extent Europe. Most people interested in edtech will know about the money investors have piled into companies like Edmodo, Udemy, Coursera, 2U, EverFi, Wireless Generation, Grockit, Busuu, etc. Interestingly few institutional investors have had the courage to back UK edtech start ups, but that’s another story.

Given the success of ImagineK12, and the growing investor interest, it’s perhaps no surprise that there have been a slew of announcements about education-specific accelerators and incubators in the last few weeks. These include Kaplan’s EdTech Accelerator with TechStars (New York), Pearson’s Catalyst incubator (UK/US), EdTech Passport from Socratic Labs (New York), Learn Launch in Boston, Emerge Venture Labs (London) and even a rather woolly ‘social impact’ edtech program due for mid 2013 from Teach First (funded by the Esmee Fairburn Foundation)

This is a good thing and I have even been looking at starting my own edtech incubator, but the difference between what I think is needed and what these programs offer, is still quite marked.

  • Only two (ImagineK12 and Kaplan’s EdTech Accelerator), have deep links with schools and students (i.e. the market). Only one (ImagineK12 again) has any real track record of success
  • Too US centric. There is a lot of investor appetite for edtech, but good investable ideas and the teams who can be found all over the world and many simply don’t want to live in the US
  • Bubble valuations – incubators and accelerators are giving pre-revenue edtech start ups crazy valuations, e.g. £40kfor 10% (or less) of their equity
  • The promise of high-level mentoring is more honoured in the breech with busy executives not having the bandwidth or the skillset needed by edtech start ups
  • A mismatch between qualifications and skills. Having an MBA/Oxford degree and time as an investment banker may help you raise some EIS/SEIS cash from your mates, but they aren’t the skillset to build a successful edtech startup.

Will they work? That depends on your metric of success. I think some of the higher profile ones will continue as small outposts within corporate behemoths, but their real remit won’t be CSR or to boost the edtech sector. They will be cogs large market intelligence programs, identifying trends and scooping up start ups whose DNA could potentially infect or kill their corporate host. Even where they get close to the market, the programs from the large players will probably suffer a fundamental disconnect between the speed and agility needed in a start up and the slow, process-driven, political cultures of their sponsors. The best example I have seen of this was with Mathletics and Microsoft. When Mathletics and World Maths Day started to take off, Microsoft owned a chunk of the equity in their owner 3P Learning, via a JV they had in Australia called 9MSN. I remember speaking to a senior Microsoft person in Seattle who said his team loved Mathletics and thought it could become a flagship product to help rejuvenate their education offering. As it turned out Microsoft couldn’t really engage with the much smaller 3P and eventualy their shares were sold to US VC firm Insight Venture Partners.

My money is on small programs that link edtech entrepreneurs quickly and directly to their market. They will be run by sharp-elbowed individuals with a successful track record in edtech. Hopefully smart UK investors will soon start backing their judgement because if they don’t the small edtech diaspora I see today will soon become a brain drain that UK plc can’t afford.

 

Ben Barton an edtech entrepreneur comments:

While I, like Richard, welcome this interest in edtech and the move of accelerators/incubators into this space, I think that without the track record of achieving funding (one route to money) or deep penetration into the education vertical (another route to cash) there is little reason for me to invest the time, effort or energy into applying, pitching and taking off to NYC for £20k in return for a 6-10% stake and no guarantees.

I prefer a do-it-yourself approach: twitter, teachmeet/edcamp, a board advisor committing twice the amount for the same stake and a no-fear attitude to approaching VCs and angel networks should get you traction, revenue and some meetings (one-to-one rather than many-to-one). Having said that, I’ve been in education for 20+ years in the UK and overseas and Zondle is my third start-up (one success and one failure).

So what do I want? Am I too late for an incubator/accelerator?

Zondle is 2 years in, 200k users, 5m questions answered every month, 6 weeks into revenue generating.

We will push through or … we could find an incubator/angel who will support us with VCs, help us to get into a core market (one US state) and push us every step of the way on details of the business, especially the financials. They may drip cash in on great terms but they will primarily be about growing the business in the market (rather than with the investor eco-system).

 
Incubator

Investment

Stake

Length of time

% funded

Located

Cycles per year

Imagine K12

$14k-$20k

4-8%

90 days

70%

Palo Alto

2

KaplanEdtech Accelerator

$20k

??

120 days

New

NYC

1

Pearson Catalyst

$10k

??

90 days

New

Global/London

1

Emerge Ventures

£15k

??

365 days

New

London

1

 

Feb 21, 2013Richard Taylor
9 years ago Education0
Richard Taylor
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