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As incubator reports 'impressive' data..

Critics cast doubt on E-Spark’s ‘scale up’ claims

ESpark winners
E-Spark: ‘making entrepreneurs backable’

Doubts have been cast on business accelerator Entrepreneurial Spark’s claims that it is helping to “scale up” companies.

The incubator today releases its latest Impact Report showing how it is producing “truly mind-blowing” results.

But critics have questioned its record, arguing that it is supporting a lot of “lifestyle” businesses with no evidence to back up its claim to be helping scale-up those who take part in its UK-wide programmes.

Entrepreneurial Spark, which is backed by Royal Bank of Scotland, KPMG, Harper Macleod and Dell/EMC, claims its latest report demonstrates “beyond doubt that the world’s largest free business accelerator is at the forefront of an entrepreneuring revolution and continues to make significantly more entrepreneurs credible, backable and investable every year”. 

The incubator, now operating from 12 locations around the UK, says it has helped more than 1,700 businesses to “develop, grow and scale-up across the UK”. The number of jobs created by those businesses supported has risen to 3,152.

However, despite describing its own record as “impressive”, critics say it cannot claim to be creating businesses of scale.  The “impact” is just 1.85 jobs per company. In Scotland it has supported 625 businesses, creating 1,047 jobs, so the impact is even lower at 1.67 jobs per company.

One critic on Facebook, Andrew Mitchellsaid “by any stretch of the imagination, [these] are not businesses of scale.

There’s a huge difference between PR impact and actually helping companies scale. Happy to eat humble pie if someone could point me to the “chiclets” that have met the scale-up criteria.”

Entrepreneur Amanda Boyle said: “Good call Andrew. You’re not the first to question the data, it’s simply an inconvenient truth that’s lost in puff and PR.”

Another leading technology investor, Ian Ritchie, also said the data was being clouded in “puff and PR”. He said: “They seem to have the politicians mesmerised. It starts companies which ‘must be good’ – but nobody questions the economic benefits of these lifestyle businesses.”

Entrepreneurial Spark issued a statement which said:

“As a social enterprise Entrepreneurial Spark is very proud to give all people an opportunity at the world of Entrepreneuring. As we’ve grown and developed across the UK, we’re now working with larger and more complex businesses.

“As a result – and from working with growing businesses such as ArcNet, Appointed, Mallzee and Beer 52 in Scotland – we’ve developed our model to provide more niche support for business leaders, whatever stage of the journey they are in – whether it be the initial idea and concept through to those in pre-scale and hunting Series A investment. This is currently being piloted across all 12 UK hubs and will be rolled out from May.”

Its report said turnover at the businesses it supported has hit £176m and that it has secured £151m in investment. In Scotland, turnover reached more than £64m.

It says 85% of the businesses are still trading, which is more than double the national average. 

Lucy-Rose Walker, Entrepreneurial Spark CEO (right), said: “We’ve given this Impact Report the title ‘Blow Your Mind’ and it’s not hard to see why.

“The stats are truly mind-blowing and we’ve enabled our entrepreneurs to create real jobs, huge turnover and significant investment via our focus on developing their entrepreneurial mindsets and behaviours. Our entrepreneurs have turned over £176m, so it is clear what an impact we are having on the UK economy.

“Our vision is to create positive social change by giving people the chance to grow and create jobs, and value in the economy. It’s really gratifying to see that those entrepreneurs have now created 3,152 jobs across the UK, all of them creating social change by contributing to their communities and local economies.

“Our partnership with Royal Bank of Scotland is such a powerful one and enables us to give hands-on practical help to start-ups of every kind, from that first spark of an idea, right up to bigger businesses needing to scale and grow.

“We have another exciting year ahead as we bring our entrepreneuring revolution to London with our 13th hub and launch the first free, dedicated fintech accelerator in Scotland. It’s going to be another mind-blowing year.”

Nicola Sturgeon, First Minister, said: “The entrepreneurial buzz around RBS’s HQ when I helped open the new entrepreneurial hub in 2016 was phenomenal and really signalled a change in the way the bank is being run.

“I am delighted that the bank’s partnership with Entrepreneurial Spark continues to go from strength to strength and more and more entrepreneurs are creating great businesses as a result.

“It is vital for the economy that start-up businesses are given all the support they need to succeed and the combination of the bank’s networks and connections and Entrepreneurial Spark’s know-how is a powerful mix.”

Alison Rose, CEO of commercial and private banking for Royal Bank of Scotland, said: “The Impact Report shows that the support our free accelerators are giving to entrepreneurs is working, enabling them to create jobs across the UK, secure millions of pounds of investment and support their local economies.

“Our hubs are now in every nation of the UK, in many major cities and we are excited to be opening a London hub later this year.”

Paula Skinner
Paula Skinner: (photo by Terry Murden)

Paula Skinner (right) of Harper Macleod, the legal partner of Entrepreneurial Spark, said: “The results achieved by businesses experiencing the ‘GoDo’ ethos of Entrepreneurial Spark has been blowing our mind since 2013 and this latest Impact Report proves that this is still accelerating.

“It’s also great to see that Scotland continues to be the source of innovations which are creating even more opportunities for businesses and as legal advisers we’re delighted to play our part as Entrepreneurial Spark continues to evolve.”

Ben McDonald, head of KPMG Enterprise, said: “Over 2016, KPMG individuals from across the firm provided more than 500 hours of strategic support to the Entrepreneurial Spark network, helping them to drive forward their growth plans. Through this relationship, we have met some truly amazing entrepreneurs who have inspired us all with their drive, innovation and determination to succeed.

“The enormous success that many of these entrepreneurs have achieved this year exemplifies the vital contribution that start-up businesses make to the UK economy in creating jobs and wealth.

“The UK has a phenomenal reputation as a great place to start a business, in part due to the support provided by accelerators such as Entrepreneurial Spark. The fact that together we can support as many start-ups as possible to grow and scale can only be great news for innovation, entrepreneurial culture and the economy at large in the UK.”


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