Europe's first £1m digital business accelerator programme has just been launched in the North East. John Hill explains why this is even bigger news than it sounds.

HOW do you build a successful start-up? If you ever dug up that particular secret and slapped it down on paper, you’d sell more books than the Bible. Even the most seasoned professionals have woken up in the morning to find they’ve spent a cool £100,000 or more on a jar of magic beans.

However, it’s generally accepted that a start-up requires more than just a plant pot-full of money to make it grow. Investment is important, but there’s also a need for a supportive environment and some experienced heads to help a team avoid the more obvious pitfalls.

That’s one of the reasons why you’re seeing more accelerator programmes popping up in the last year or so. The process allows teams to focus intensively on a concept over a shorter period and receive guidance from mentors, while investors get to see how a team adapts and grows under pressure.

London has its own SeedCamp project, while Cambridge has Springboard and Birmingham launched its Oxygen Accelerator in May. But right now, the North East has one of the biggest.

Ignite100 launched last week with some eye-catching stats. Thanks to the combined investment of Northstar Ventures and IP Group and a handful of angel investors such as Hotspur Capital Partners and Green Lane Capital, teams will be able to get their hands on £100,000 each following an intensive 13-week development programme. It’s the first £1m digital start-up accelerator programme in Europe, and its backers hope it will eventually have the same profile and impact as storied US counterparts such as TechStars and Y Combinator.

IP Group’s Nick Edgar says: “It’s a great laboratory for us in terms of pulling in some really good businesses. We’d like to think the best in class from the programme will be companies we’ll be working with for years to come.

“It has the ability to offer a relatively low cost way to build an ecosystem and a buzz around a city. TechStars had a transformational effect in Colorado. IP Group is very committed to our commercial targets but also our social targets of really creating value in a wider sense in terms of jobs.”

Applications for the first batch of Ignite100 companies are being accepted through www.ignite100.com  until a minute to midnight on July 17, and the first programme is expected to run in Newcastle in September.

The idea is that teams receive £5,000 per founder up to a maximum of £15,000. In return, the programme takes 8% of shares in the company.

Teams are selected on the strength of their business concept, but during the programme this precious concept is dissected by a stream of mentors from the North East and beyond. The thinking is that by the end of the project, the idea will have been moulded into a viable business. At that point, the team will receive the balance of the £100,000 as a convertible loan that will be become equity at a later point.

The concept has already been road-tested in the North East by The Difference Engine, a start-up boot camp run by former investment manager Jon Bradford with backing from One North East and Sunderland and Middlesbrough Councils.

Of the nine teams that emerged from the first programme in Middlesbrough last year, over half have secured funding, while the second batch are starting to pick up investment after leaving in March.

Of these alumni, one of the more high profile is Screenreach, which allows smartphone users to interact with digital signage and TV in a more dynamic way. It has since established a presence in New York and has raised more than £750,000 since launching.

Speaking to nebusiness last year, Wigan-born co-founder Paul Rawlings said: “We had the technology when we went in, but we came out with a team, a product, a customer and funding as well.

“We would have eventually got to where we are now, but it would have taken a lot longer. It put us in front of the right people, but it doesn’t do the work for you. You’ve got to want to do it.”

IP Group – which is contributing its half-share through the Finance for Business North East Technology Fund – says Ignite100 is “very much building on the Difference Engine”.

Nick Edgar says: “The basic concept is backing a company at a very early stage in their life with relatively small amounts of money but a lot of sweat, and putting them in the right environment.

“It’s a great headline to say it’s Europe’s first £1m digital accelerator programme, but it’s not just a programme over 13 weeks. It’s front-end intensive, but we feel the value is in extending all the benefits of the relationship beyond that.”