INCUBATOR PRE ACCELRATOR ACCELERATOR

Nat West has extensive experience running incubators through entrepreneurial spark and recently launched an NW accelerator inhouse. They have a site in Manchester currently. The University in Chester would also be valuable as a local partner if approached as a JV partner.

STRENGTHS

• Office space and services offered to businesses are seen to be positive

• Cost effective for the business and lower costs for public sector

• Increases survival rate

• Localised businesses means they will stay local

Weakness

• Programmes are only as good as those running them, and experience

• Mentor network can be limited

• OPEX is usually supported by the public sector or large businesses that are supporting

EQUITY STAKE

• Equity stakes are usually not taken its about activation though seed capital can be provided in exchange for equity

SEED FUNDING

FUNDING

• Small seed funding can be provided if for-profit incubators 5K - 10K

Corporate sponsors or as part of ecosystem build-out by the public sector

Deepbridge would be a valuable addition to this early stage approach for the accelerator, as they have expertise in business evaluation and could work with the University business school to develop a sixweek course approach.

Nat West / Barclays / Deepbridge are all potential partners; though, for the latter, there may well be a cost; Deepbridge is uniquely positioned as a critical player within the CWAC region, alongside Grosvenor Food and Agtech, and they have both network and funding capability. Oxbury Bank is another potential partner.

• A low-cost approach to gauge interest and viability

• Sets out an agenda and intent for something bigger

• Useful to validate and discover business ideas within CWAC

• Maps out potential businesses by sector

• Theme / Sector needs to be very clear and to achieve the most interest it needs to be well promoted

• Provides a snapshot only around potential No equity stakes are taken this is about awareness and discovery

• Businesses attract and raise more funding on average if they attend an accelerator

• Accelerators are geared to growth and success

• Programmes are a talking point and positive PR

• Sector focus and well structured

• Programmes which are well run and successful are not free or cheap

• Call for cohorts may include outside of the area - and there is a risk they leave after the programme

• CWAC does not have a reputation it will need to build, and that requires commitment in years for the programme delivery

Equity stakes 4%- 8% of the company split with the operating partner and investors in the programme.

THEMES FOR CWAC

Creative / Digital / Technology

Not applicable

Seed funding of £20-30K per team

Funding could be through sponsorship/marketing budgetspublic or private sector

Creative / Digital / Technology / Energy

Most programmes run through corporate sponsors, / Public sector, / Collection of investors, and angels

Net Zero / Digital / Creative tech / AgriTech

In terms of the programmes available, the allocated costs are based on previous experience with accelerators and incubators.

Programme costs

Incubator

Incubator costs are based on a cohort of 20 pax with an average price for space at £200 per person over 12 months.

An allocation of an FTE at 30K per annum, with £15,000allocated for speakers and events and a £10,000 allowance for the programme.

Accelerator

Costs vary depending on the operator; most programmes will run with ten teams, have a fixed time duration of 3 months, and include seed funding for groups of circa £15,000 + in return for equity.

The programme leads x 1 and coordinators x 2 are built into these costs, alongside speakers. Mentors will usually give their time FOC.

These costs are based on Ignite 100 and include three-month office space. Some programmes will allow follow on space three months after the course.

The most successful programmes will have a defined theme to gather and attract teams around a particular sector. The wider the theme is directly proportionate to the numbers who apply.

It is important to note that building a reputation for quality applications takes time.

Pre accelerator

Costs are based on a six-week delivery, one day or evening per week with a key member of an accelerator team and usually held within a city location, which invites teams to apply and attend. This is about validating concepts and building outreach to discover teams for the accelerator. It is a light-touch approach to discovery.

The following table explains the different providers that have already expressed interest in running or supporting an early-stage business approach. The table summarises the key components offered by those three providers.

Formally approached CWAC to run programme

Barclays

Deepbridge NatWest

Programme cost

£300,000 + £50k staffing

Network capability

To be advised

Access to programme FOC

Investment and mentor experience

Local to Chester

Previous accelerator experience

Sector focus

High-growth digital and tech / Agritech and net zero

Required physical space

Notes

Recommendation

Technology / Life Sciences

Climate led / Purpose led ! ! Virtual

Expressed interest in the city centre if space could be found. Programmes delivered by Greenborough Management or 10x10

Renewable energy

Want to be present in the city centre and be a part of the ecosystem. Unable to receive a response on costs and how they see a programme working

Have a hub in Manchester

Explore the possibility of being present in Chester

Chester partners should explore partnership opportunities and draw on the strengths of their programmes to ensure a strategic fit for the needs of the city and borough. There might be an advantage in Chester considering a hybrid approach that brings different provisions together as a broader programme to support establishing a more robust, better-connected ecosystem. The city has a broad business base, it’s walkable, and the community is willing to play their part. Chester should seek to scale the programme with components such as sector themes potentially being phased, subject to the provider. The accelerator should be named and held by Chester, with the provider being the operator. This provides ownership and continuity if programmes run over several years.

There is a well-supported opportunity to create a new future for Chester with workspace creation. Whilst previously it’s been about individual business, this approach would act as the glue to the area and pull people together, signalling as a beacon for change and new opportunities. The appeal would be for all types of businesses to coalesce, starting with creative and digital and then reaching out to others as this continues to build.

Figures support and show that start-up rates for the local economy are viable to look at further development. The feedback from the business community supports creating a space focusing on the early stage, micro businesses and smaller SMEs within the city centre.

The building blocks are already in place for the development to allow these businesses to grow and take up space as the site is developed.

A key challenge for the digital, software and creative tech sectors is the scaling-up phases of companies and development, often through several steps and a number looking to achieve multimillion-pound equity investment. Partnerships and investment partners alongside an angel network should be developed to ensure investment is generated to support rapid growth from the seed stage through to series A.

Accelerators do what they say. They supercharge the process from 18 months to 3 months and create the environmental conditions to fast-track it. This is why a mixed approach works, and accelerators generally look to base within dynamic workspaces, but to establish and truly create impact, there needs to be a commitment to the program over a sustained time to truly see the combined impact.

Chester, as a destination, needs to provide high-quality office and incubation facilities; this would be essential to realise long-term business growth.

There is a demand for an accessible and affordable hub within Chester City that supports business growth and development, allowing for scale-up.

With proven demand, there is a need for an inspired and relevant workspace. However, It needs to be created and activated correctly with collaborative thinking from all relevant partners previously referenced to help define and secure a positive future for Chester.

Final concluding thought and update

The Council, alongside a number of interested parties, have already made some progress in identifying existing and emerging workspace across the City, which could potentially lend themselves to piloting some collaborative ventures, supporting a hub and spoke model that could work well across different locations in the city and widerborough in time, supported by strong and innovative programming.

There is an opportunity as part of the UK Shared Prosperity Funding to enhance the physical offering with the provision of some dedicated business support, which would target pre-start, earlystage and established entrepreneurs alongside established and scaling businesses with the ability to grow. There is a key role to play in facilitating the community to come together and in connecting early-stage businesses with established small, medium and large enterprises to drive forward innovation and collaboration.

As with many areas in the UK, CWAC as a region faces the challenge of supporting entrepreneurs and SME growth in the early stage.

In the short term, it is envisaged that this approach will build the enterprise ecosystem within the City and, in particular, create a cohort of talent within various locations across the City, providing a platform to scale activity in the future.