Facilities, Programs, and Results: The Many Ways ESOs Fuel Startups

Over the course of this year, we’ve been publishing results from InBIA’s FY23 Impact Index survey to shed light on different aspects of ESO operations to get a sense of how different organizations compare to each other from revenue to expenses to staffing. Now, we explore another significant piece of the ESO picture: the economic impact of companies that have participated in support programming.

Facilities

As referenced in the previous blog, ESOs take many different forms through the support models they offer, including business incubators, accelerators, support hubs, economic development organizations, and other models. In addition to these different models, ESOs vary in terms of how they provide services, whether in-house to companies located in an ESO facility, or through classes and events for entrepreneurs whose companies are physically located elsewhere.  Of respondents, 77% report operating a physical facility in which they house startup companies. These buildings typically provide affordable workspace, specialized equipment, shared resources, and other amenities difficult for startups to afford on their own.  

Since 2020, we have seen a significant increase in virtual programming as an option for entrepreneurs and the data shows it’s more of a complement to the physical space than a replacement for it. Of the respondents, 70% currently offer some sort of virtual programming, which enables them to provide better accessibility as well as expanded mentor networks and flexible learning opportunities.

When we examine facility intensity, meaning facility clients as a percentage of all active clients, additional patterns emerge across ESO models. Business Incubators have the clearest facility-centered profile, with a median 76% of active clients physically located in their facilities (n=31). That compares with 14% for Support Hubs (n=20), 9% for Accelerators (n=9), and 0% for Economic Development Organizations (n=10). ESOs outside these four primary models post a median of 58% (n=20), reflecting the mix of coworking spaces and makerspaces in that group, both facility-first by design. This is consistent with physical space being a central, defining component of the incubator model specifically, and a secondary feature for Accelerators and Support Hubs. Economic Development Organizations generally do not house clients directly, consistent with their role as a coordinating or funding body rather than an operator.

Startups Served

Regardless of whether the programming is virtual or in-person, many ESOs are currently serving dozens of startups in their communities. The data shows responding ESOs serve a median of 50 startups each through both in-house and external services, however this metric varies across ESO models with Support Hubs serving the largest median client base at 107 active clients, followed by Accelerators at 70 and Business Incubators at 48. As they work with companies, ESOs set milestones and criteria for completing the program and moving on to the next stage of development. Respondents showed an average of 24 companies graduating each year, with a median number of five showing many ESOs have just a handful of graduates annually. 

The economic impact of the startups that participate in ESO programming is clear - in FY23, the median revenue ESOs reported their clients had generated was $2 million. Because of the variance in companies served, some ESOs reported much higher revenue generation than others, making the average $198.7 million. When examining revenue per client across models, additional patterns emerge with support Hubs report the highest median client revenue per active client at approximately $209,000, followed by Economic Development Organizations at $163,000, Business Incubators at approximately $91,000 and accelerators at approximately $14,700.

The survey also asked how much capital ESO client companies had raised in the last year and again there was much variation because of the types of startups served. The average amount of capital raised was $30.8 million and the median was $950,000. These numbers show ESOs are serving companies that raise large amounts of capital along with companies that raise more modest amounts. 

ESOs come in many forms, but survey data make it clear that by providing access to space, expertise, networks, and resources, these organizations are supporting hundreds of startups at a time and helping them reach important growth milestones. The revenue generated and capital raised by client companies demonstrate that investments in entrepreneurship support create measurable economic returns, reinforcing the vital role ESOs play in fostering innovation, job creation, and long-term economic impact.