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Britain’s Oxygen Accelerator Hopes to Breathe Life Into Startups

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Mark Hales, Oxygen AcceleratorIt’s almost impossible to go anywhere in the tech industry these days without bumping into a new accelerator program. The best examples, Y Combinator and TechStars, are well-known and respected — but they’re just the tip of the iceberg. Even a country like Britain already boasts plenty of its own riffs on the idea. None of that seems to be putting off new entrants, such as another name that’s just decided to enter the fray: Oxygen Accelerator.

The new U.K.-based scheme, which opens to applications today, follows a familiar pattern. A handful of teams are picked out to attend a bootcamp, where they are trained to be crack founders, introduced to great mentors, helped to improve their ideas and connected to investors who can take their companies further.

The real spin in this case is that Oxygen is based in Birmingham, Britain’s second-largest city. It’s a big place, with a population of 2.2 million (around the size of a city like Houston or Paris) but not known as a hotbed of high-tech activity. Given that coverage of Britain’s startup industry is generally fixated on a handful of locations — notably London’s “Silicon Roundabout” and places with academic links, such as Cambridge — that choice may seem odd. But the reason for the location is straightforward: Oxygen is the work of local serial entrepreneur Mark Hales, a Birmingham business guru with a track record of success and a real desire to help some great startups.

He’s brought in the local government and businesses to support the project, which came to him after realizing his own difficulties as a young company-builder stemmed from a lack of support. “I started my entrepreneurial career in my early 20s. I took over a small family business with 30 employees and a turnover of £250,000 ($409,000 USD). It was a massive learning curve,” he said.

He says well-informed mentors were very hard to come by in the early days — and that the situation only improved as he became more experienced, until the point when (perversely) he ended up getting great advice at the point when he actually needed it least. “Bizarrely, by the time I exited that business — which I had built it to £65 million turnover and 4,500 employees — I had the best advisers talking to me for free. That’s crazy… we should turn it upside down,” he said.

While Hales admits he’s not a tech guy (the company he mentioned, Claimar, specialized in home care for the elderly), he has a track record of success and good connections as an investor and adviser with another accelerator, Springboard (based in Cambridge, England) and is on the boards of a couple of online companies. Oxygen already has a roster of mentors, angels and supporters from big name companies such as Amazon (s amzn) and Google (s goog), and advisers from a number of venture capital firms.

You could question whether the involvement of Hales is a signal for the rest of the market. After all, when non-techies are getting involved in tech accelerators, it could be a sign there are too many around. Doesn’t it imply there’s just too much accelerator activity? Aren’t most of them in danger of simply copying the model over and over again with decreasing benefits for investors and entrepreneurs alike? Not so, Hales suggests.

“I’d challenge that,” he said. “In fact, the opposite’s true: We’re starting to share the mentor pool, to share and distribute our investor networks, to share and distribute actual applications. We’re not at a stage where we’ve hit saturation.”

He admits it’s not easy to stand out from the crowd when there’s a lot of activity going on. Attracting applicants is about “working really hard at it,” and bringing in great people to work with the teams — but he thinks there are enough great ideas and budding entrepreneurs out there that the really tough job will be whittling down the applicants and deciding who makes the cut.

And what do those teams get? For starters, £20,000 in exchange for six-percent equity. The money — intended to help the team get to Birmingham and survive the three-month bootcamp — is actually a loan, repayable at a later date so it can be re-invested into the next batch of startups. After they graduate, companies also get the chance to rent office space at Birmingham Science Park Aston. Hales says he expects to write off some of those deals, but suggests that accelerator programs give companies a far greater chance of success than other ways of doing early stage investment. (Tech Stars, for example, claims only five percent of its investments fail outright).

The proof, as always, will actually come when the program is up and running. Applications close on June 30, with shortlisted candidates interviewed in July and then the finalists picked out. The bootcamp itself runs in Birmingham from Sept. 1 through Nov. 30.

“What’s the biggest challenge?” asks Hales. “Restraint. We want to do so much, but we’ve got to be focused on delivering what we say we can.”

Still, he’s not resting too much. “If demand is high, we’ll build the infrastructure,” he says. “We’d love nothing more than running the program every six months for 30 teams.”