Interactive resources for incubators and accelerators
Interactive resources for incubators and accelerators
Interactive resources for incubators and accelerators

Value for Money

This section looks at the fundamental elements of measuring the value for money (VFM) of an incubator or accelerator program. It explores the concept of value for money and why you would measure it, before outlining the different calculations that need to take place. It then provides some helpful questions for intermediaries to ask themselves before undertaking a VFM measurement.

What is ‘Value for Money’?

Value for money (VFM) calculations consider the quality of what is being produced in addition to the economy and efficiency with which it is being produced.

For example, for every $1 invested into an accelerator program:

  • How many jobs were created?
  • How much additional revenue did businesses earn?

 

Reflection

The concept of value for money is explicitly comparative. This means that is is always measured again something, such as a benchmark, other similar programs, or alternative interventions.

Why Use a VFM Analysis?

  • 01.

    Useful for Intermediaries

    This can be a management tool for incubators and accelerators to understand when it may be necessary to reduce costs or work to improve outcomes.

  • 02.

    Best for Comparing Similar Programs

    These measures are most useful as comparative tools to assess a portfolio of projects by a common standard, rather than a stand-alone metric.

  • 03.

    Enables Ongoing Data Collection

    Intermediaries or their funders should consider integrating this (or a similar) methodology into ongoing data collection processes.

Practical Calculations of Value for Money

For programs that have application and follow-up data for cohort ventures:

Where:

Program Cost per Venture = Total Program Cost + Total Capital Invested by the Accelerator

Average Change in Outcome = Cohort Average outcome in Year  – Cohort Average in Baseline Year

A resulting statement might be: “Every $1,000 in accelerator costs was associated with the creation of one new job at cohort companies after two years.”

For programs that have application and follow-up data for cohort ventures and a comparison group on non-accelerated ventures:

Where:

Program Cost per Venture = Total Program Cost + Total Capital Invested by the Accelerator

Average Net Change in Outcome = (Cohort Average outcome in Year  – Cohort Average in Baseline Year) – (Comparison Average Outcome in Year – Comparison in Baseline Year).

A resulting statement might be: “Every $2,000 in accelerator costs was associated with one additional new job at cohort companies two years later, in comparison to non-cohort companies.”

Questions to Ask Before Conducting a VFM Assessment

  • 01.

    What and When

    What is an appropriate outcome based on your goals?

    When can you expect to see this outcome?

  • 02.

    How

    How can this outcome be measured?

     

  • 03.

    Which

    Which costs should be included in your calculation?

    Direct costs and investments made by the accelerator?

    What about overhead costs?

    What about research and development costs?

Practical Tip

Start by determining what type of value your incubator or accelerator is hoping to create.

Different accelerator types have different goals for their programs.

TOOL / EXERCISE

Modified Theory of Change for Accelerators

  • 1.

    GALI has produced a modified theory of change model for intermediaries such as incubators and accelerators.

     

    This is not meant to be a prescriptive model for every intermediary to use, but is an example based on a common accelerator structure that GALI have found in their research.

     

    Intermediaries are encouraged to use this as a starting point to develop your own Theory of Change.

     

    Source: GALI

Resources

  • Measuring the Value for Money of Acceleration

    A methods brief from GALI that provides VFM guidance to practitioners

    View & Download
  • Modified Theory of Change for Accelerators

    An example from GALI of what a ToC for intermediaries may look like

    View & Download

  • Content Contributed By

    The Global Accelerator Learning Initiative (GALI) is a collaboration between the Aspen Network of Development Entrepreneurs (ANDE) and Social Enterprise @ Goizueta (SE@G) at Emory University. GALI is set up to explore and answer key questions about acceleration. Social Enterprise @ Goizueta (SE@G) is a research centre within the Emory University business school that aims to generate positive societal impacts by making markets work for more people, in more places, in more ways through academic research, fieldwork programs, and student engagement.

     

    galidata.org

     

     

    Spring exists to change the world through entrepreneurship. A certified B Corporation, Spring supports entrepreneurs who are using business as a force for good through incubation, acceleration, leaders roundtables, funding training, workshops, and ecosystem development advisory services. Headquartered in Vancouver, Canada, Spring supports entrepreneurs via City Partners in over 10 countries around the world. Spring has supported more than 700 entrepreneurs to launch more than 300 businesses in less than five years.

     

    spring.is

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Financial Sustainability

How to keep your organisation or enterprise financially sustainable in the short- and long-term