THE 40% PROBLEM

Dirk Bischof
Jan 30
7 min read

Updated: Feb 12

Why Your Enterprise Support Ecosystem Is Wasting Half Its Potential (And It's Not a Funding Problem).

We're wasting millions on enterprise support that founders can't actually use.

Not because programmes don't work. Research shows that over 60% of startup founders consider accelerator participation significant or vital to their success (Nesta, 2019). Business survival rates for supported ventures outperform national averages by 15-20 percentage points, with graduates of accelerators showing a 23% higher survival rate than businesses that don't participate (GoingVC). Founders report capability improvements of 50% or more across critical business skills.

The problem is what happens between the programmes.

Ask a founder in any UK borough to describe their journey through local enterprise support, and you'll hear the same story. Three different organisations, whether charity-led incubators, corporate accelerators, or university programmes, each with different application processes. One measures jobs created, another capital raised, a third social impact. No warm handoffs. No shared database. No coordinated pathway.

The search begins from scratch every single time.

Meanwhile, the organisations trying to help face their own challenges. Charity-led programmes spend substantial portions of staff time on fundraising rather than delivery, with small charities spending 8-14% of total expenditure on fundraising activities (NCVO). Corporate accelerators operate in quarterly cycles that don't match founder development timelines. VC-backed programmes focus on investment-ready businesses, leaving a gap for earlier-stage founders. Universities run excellent programmes that often end when students graduate, with no clear next step.

After advising councils, corporates, and foundations on ecosystem development for over a decade, supporting 10,000+ founders through various models, we've watched this pattern repeat across dozens of communities.

Based on our practitioner experience, local enterprise ecosystems operate at 40-50% of their potential effectiveness.

This isn't a funding problem. It's an architecture and collaboration problem.

The fragmentation tax

Consider what this coordination failure actually costs.

A founder discovers support in her borough. She joins a six-month accelerator and gains genuine value. Then the programme ends with no clear next step. It's not that the founder hasn’t gained valuable skills, new insights on how to run her business better, made valuable connections but the founder needs evolve radically during the much feared ‘founder valley of death’, the first 3 years from starting the business. During these 3 years, 80-90% of businesses fail, without support. Which gets flipped on its head, with support, ensuring higher survival rates.

Back to our founder, after the first startup programme, she starts searching again. Different eligibility criteria. New application. Another organisation with slightly different success metrics, new support offer and new networking connections.

One founder told us: "Entrepreneurship can be a lonely journey and it was amazing to connect with others treading the same path but navigating the support offers out there is really daunting as I don’t know what good looks like, when many offer the same thing."

Creating community shouldn't be an exceptional feature of particularly good programmes. It should be baseline ecosystem infrastructure.

But here's what's actually happening across the sector:

In our experience supporting thousands of founders, they spend significant time navigating disconnected systems rather than building businesses. Organisations duplicate effort. Multiple groups, whether charities, corporates, or universities, teaching identical content on business models, financial management, impact measurement. Everyone competes for the same founders, the same grant pools, the same corporate partners. Nobody shares the cost of essential tools.

The costs accumulate at three levels:

For founders: Time spent navigating rather than building. Energy spent bridging organisational gaps. Cognitive load understanding why each programme measures success differently. Many plateau or leave for better-resourced ecosystems, not because their ideas failed, but because local infrastructure couldn't support their next stage.

For organisations: Resources diverted from delivery to fundraising and reporting. Inability to invest in shared infrastructure that would multiply effectiveness. Competition preventing the collaboration that would serve founders better. Staff burnout from constant survival mode.

For the ecosystem: Lost potential from businesses that could thrive with coordinated support. Wasted skills investment when no next step exists. Innovation addressing real social challenges that can't access scale capital because investors don't see ecosystem connectivity that would reduce risk.

One founder building mental health support reflected: "Funding allowed us to build software to support our volunteers, connect more calls, and provide emergency food or transport for those in crisis."

Small amounts of well-timed capital produce outsized impact when delivered through connected ecosystems.

The fragmentation tax is the opportunity cost of not doing this systematically.

What we measure vs what we miss

Individual programmes report improved confidence, skill development, business growth, capital raised. The data looks encouraging.

But this data reveals as much by what it doesn't capture as by what it does.

No one tracks how many hours founders spend searching for their next support source. No shared system measures how many businesses plateau because infrastructure couldn't support their growth stage. No dashboard shows how much organisational capacity across charities, corporates, and universities gets diverted from delivery to administration.

Most critically, no common framework allows impact aggregation across an ecosystem.

One organisation counts jobs created. Another tracks capital raised. A third measures social outcomes using their own rubric. When a council or corporate partner asks "what's the total impact of enterprise support in this borough?" no one can answer definitively.

This measurement fragmentation prevents the case for larger, longer-term investment from being made convincingly.

Consider what becomes visible when measurement coordinates. In our programmes at Hatch Enterprise, founders in structured programmes reported their ability to access funding increased by 123%, to measure impact by 92%, and to communicate that impact by 73% (Hatch Impact Reports, 2023-24).

These aren't "satisfaction" scores. They're capability improvements in areas that determine business viability.

But these numbers come from organisations that invested in robust measurement. Most lack that capacity. The founders they serve achieve similar outcomes, but without shared infrastructure, that impact remains invisible to decision-makers allocating resources.

The four players and their blind spots

Local enterprise ecosystems involve four distinct actors: government, enterprise support organisations (charities, corporates, universities, VC programmes), corporates as funders, and philanthropy. Each brings essential capabilities.

Their funding cycles, success measures, and time horizons rarely align.

Local authorities possess convening power, planning authority, democratic legitimacy. They can bring stakeholders to the table in ways no other player can. But short political cycles create pressure for visible outcomes within 2-3 years, whilst ecosystem development requires 5-10 year horizons.

Enterprise support organisations, whether charity-led, corporate-backed, or university programmes, understand specific communities deeply and can move faster than larger institutions. They deliver the peer cohorts and targeted support that generate measurable outcomes. But most operate on constrained cycles. Charities face annual funding uncertainty. Corporate programmes shift with business priorities. University programmes follow academic calendars. VC accelerators focus on investment-ready businesses, missing earlier stages.

Philanthropic funders provide risk capital and fund innovation that public money can't back. But their funding typically focuses on programmes rather than infrastructure. Innovation gets funded. Coordination capacity doesn't.

Corporates as funders possess resources that dwarf public and philanthropic funding combined. They need talent pipelines, innovation partnerships, measurable ESG impact. Yet most engagement consists of one-off mentoring days or CSR grants for discrete projects.

The gap between what corporates spend on ESG reporting and what local ecosystems receive reveals a fundamental misunderstanding: investing in local entrepreneurship ecosystems isn't charity. It's economic infrastructure development with measurable returns.

Each actor optimises rationally for their own constraints.

The cumulative result? Founders bear the coordination cost themselves. Well-intentioned silos reward novelty over infrastructure, pilots over permanence.

The pattern you can't see from where you sit

After supporting thousands of founders across dozens of ecosystem configurations, certain patterns become clear.

Pattern one: Fragmentation compounds. Each new programme added without coordination increases the navigation burden geometrically, not arithmetically. The tenth programme in a fragmented ecosystem helps fewer founders than the first because complexity increased faster than capacity.

Pattern two: Coordination creates non-linear returns. When elements connect properly, impact multiplies rather than adds. A founder receiving validation, skills development, and capital access in sequence achieves more than three times the outcome of a founder receiving only one element.

Pattern three: Infrastructure investment pays for itself. Based on our analysis, coordination costs get recovered through reduced duplication and improved outcomes within 18-24 months. But because costs are upfront and benefits accrue over time, funding models that can't accommodate this timeline prevent infrastructure development.

Pattern four: Inclusive by design differs from inclusive by selection. Ecosystems targeting underrepresented founders systematically achieve demographic participation that "open access" models never match. In our programmes, 80% of participants came from ethnic minority backgrounds, 81% identified as women or marginalised genders, and 83% focused businesses on UN Sustainable Development Goals (Hatch Impact Reports, 2023-24). One founder told us: "I felt the programme acknowledged my disabilities, which helped me feel really comfortable, helped me understand how to embrace these in what I do."

Inclusive outcomes require inclusive design, not just inclusive eligibility.

Pattern five: The ecosystem matters more than the programme. Individual programme quality matters, but ecosystem infrastructure determines whether outcomes compound or dissipate. A founder completing an excellent accelerator with no next step experiences less long-term impact than a founder completing an adequate programme embedded in strong infrastructure.

These aren't theoretical. They emerge from data across thousands of founders.

They suggest that efforts to improve outcomes by making individual programmes marginally better miss the higher-leverage intervention: connecting what already exists.

What this actually means

If fragmentation costs this much, why does it persist?

Because no single actor can fix it alone. Because funding structures reward new programmes over coordination capacity. Because measuring individual organisational impact is easier than measuring collective ecosystem outcomes.

Because we've confused activity with effectiveness.

The technical knowledge of how to build coordinated ecosystems exists. The business case is clear. The tools are available.

What's required is leadership. Councils willing to convene. Corporates willing to invest strategically. Funders willing to back infrastructure alongside innovation. Programme operators, whether charities, corporate accelerators, or university incubators, willing to coordinate rather than compete.

In Part 2, we'll show you what happens when coordination actually works, and why the solution costs less than you think.

For now, the question for every stakeholder is this: given what we know about fragmentation costs and coordination benefits, what's preventing us from making the shift?

Dirk Bischof founded Hatch Enterprise in 2013 and led it for 12 years, supporting over 10,000 entrepreneurs whilst developing insights into what makes ecosystems work. He now focuses on investing with impact as a partner at Korra Ventures and advisory/ consulting services through Venture Impact Partners.

Caroline Gormley is an award-winning consultant specialising in strategy, philanthropy and funding models for charities and impact-led organisations. With 18+ years' experience, she partners with organisations to align purpose and performance.

Together, we help local authorities, corporates and foundations design coordinated enterprise ecosystems through three core services:

Building new coordinated programmes from scratch
Auditing existing support for effectiveness and impact
Convening and coordinating provision for increased impact using place-based or thematic approaches

Ready to explore how these insights apply to your ecosystem? Let's talk.