An overview of impact incubators and accelerators in Brazil
Although 54% of Brazilians report having the knowledge, skills and experience necessary to start a new venture, 36% are afraid of failing. The fact is that one in every four new ventures does not survive beyond its first two years.
Now consider businesses involving innovation: in their products or services, in their processes, in their consumer markets, in their technology, in their supply chains or in their distribution. Not only do they face the same risks for overall business survival as a traditional business, they also face the challenge of entering or creating a market. This is the case with social ventures, wherein entrepreneurs are rethinking products and services in order to change social realities.
Given the challenges social entrepreneurs face, it has become common for them to seek the support of incubators and accelerators. To meet this high demand, many incubators and have become specialized in supporting social businesses. In Brazil, they are called impact incubators and impact accelerators.
Traditional business incubators and accelerators
Traditionally in Brazil, “incubation” refers to the support given by universities, the government and non-profits to early-stage companies. This support is given for their work in a niche market, on research and development and/or because they lack experience in business management.
Conversely, “accelerators” are related to the world of tech start-ups. Tech startups tend to need less research and fewer financial resources to get started, so the profile of accelerators is different. While many incubators are subsidized by the Brazilian government, accelerators tend to be for-profit companies running with the resources of private capital. Whereas incubators support ventures for one to three years, accelerators support ventures for around three months. And while incubation programs are usually free of cost for entrepreneurs, accelerators request interest or direct private equity.
Social business incubators and accelerators
Unlike the world of traditional business startups, in the world of social businesses, incubators and accelerators play very similar roles.
Many impact accelerators, although not focused on tech start-ups, have adopted the accelerator model in order to gain dynamism in growing social businesses. Like traditional accelerators, they look for scalable models that can grow very quickly, resulting in a much bigger social impact.
Also like traditional accelerators, they tend not to ask for business plans–a good idea can be enough. The most important thing is to take the idea to the market/community, get feedback and then go back to improve the business model. This bypasses the risk of spending several months working on a complex business plan based on false pre-conceptions which fails when it finally reaches the market.
In addition to developing ideas and models, impact accelerators also play the role of a traditional incubator by stimulating sector development. This requires some level of investment in recruitment and mobilization that the tech start-up accelerators usually do not need to spendas they are a part of an already existing market.
The impact incubators have also utilized typical elements of accelerators like the “mentorship” programs: working with renowned executives or entrepreneurs with market exposure, consultants and coaches.
The most common services offered by both impact incubators and accelerators are:
- Evaluation of the business model: Analysis and reflection on whether the venture’s business model is making the best use of the market opportunities and whether it is ready to fulfill its potential.
- Management support: Finances, accounting, legal, HR, marketing, fundraising, quality, etc.
- Tech support: Ideation, design, prototyping, testing, etc.
- Networks: Access to partners, people, proper supply chain, distributors, peer entrepreneurs and, mainly, investors.
- Coaching & mentorship: Access to market experts through workshops; direct coaching with executives and successful entrepreneurs.
This text was originally posted on the blog “Mercado de Impacto,”an initiative by Brazilians Cristina Yoshida and Guilherme Ralisch. Its purpose is to spread the word abou tsocial business and to help budding social entrepreneurs in undertaking their ideas in Brazil. Journeys for Change will visit Artemisia, a leading accelerator incubator on our trip to Brazil in May 2014. Join us!