Startup accelerator: Difference between revisions

Revision as of 22:33, 29 September 2023

Revision as of 04:27, 11 March 2024

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{{Short description|Company that invests in and supports startups}}

{{Use mdy dates|date=March 2023}}

'''Startup accelerators''', also known as '''seed accelerators''', are fixed-term, [[Cohort (educational group)|cohort-based]] programs, that include [[mentorship]] and educational components, and culminate in a public [[sales pitch|pitch]] event or [[demo day]].<ref>{{Cite journal |last=Cohen |first=Susan |year=2013 |title=What Do Accelerators Do? Insights from Incubators and Angels |journal=Innovations |volume=8 |issue=3–4 |pages=19–25 |doi=10.1162/inov_a_00184 |doi-access=free}}</ref> While traditional [[business incubator]]s are often government-funded, generally take no equity, and rarely provide [[funding]], accelerators can be either privately or publicly funded and cover a wide range of industries.<ref>{{Cite journal |last1=Bone |first1=Jonathan |last2=Allen |first2=Olivia |last3=Haley |first3=Christopher |year=2017 |title=Business Incubators and Accelerators: the National Picture |url=https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/955469/business-incubators-accelerators-uk-report.pdf}}</ref> Unlike [[business incubators]], the application process for seed accelerators is open to anyone, but is highly competitive.<ref name="accelerating-studies" /> There are specific accelerators, such as [[corporate accelerator]]s, which are often subsidiaries or programs of larger corporations that act like seed accelerators.<ref>{{Cite web |last=Crichton |first=Danny |date=August 25, 2014 |title=Corporate Accelerators Are An Oxymoron |url=http://techcrunch.com/2014/08/25/corporate-accelerators-are-an-oxymoron/ |access-date=June 17, 2015}}</ref>

==Distinctive qualities==

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# The application process is open to anyone but highly competitive. For instance, [[Y Combinator (company)|Y Combinator]] and [[TechStars]] have application acceptance rates between 1% and 3%.

# Seed [[equity investment|investment]] in [[Startup company|startups]] may be made, in exchange for equity. Typically, the investment is between {{US$|20000}} to {{US$|50000}} in the US, or {{GBP|10000}} to {{GBP|50000}} in Europe.<ref name="accelerating-studies" />

# The focus is generally on small teams, not on individual founders. Accelerators generally consider that one person is insufficient to handle all the work associated with a startup. However, a number of 'founder first' accelerators exist that focus on solo founders, including [[Entrepreneur First]], [[Antler (venture capital firm)|Antler]], Oneday and Underdog Accelerator.<ref>{{Cite web |title=Underdog Startup Accelerator {{!}} Expert Support to Launch Your Startup |url=https://underdogaccelerator.com/ |access-date=2023-08-14 |website=Underdog Startup Accelerator {{!}} Expert Support to Launch Your Startup |language=en}}</ref>

# The startups must "graduate" by a given deadline, typically after 3 months. During this time, they receive intensive mentoring and training, and they are expected to iterate rapidly. Virtually all accelerators end their programs with a "demo day", where the startups present to investors.<ref name="gilani21">{{Cite web |last=Gilani |first=Aziz |last2=Dettori, Gianluca |date=July 16, 2011 |title=Incubators in US and Europe - Speed and scale in capital formation |url=http://www.slideshare.net/dgiluz/accellerators-in-us-and-europe/21 |access-date=September 14, 2012 |publisher=Kauffman Fellow Program |page=21}}</ref>

# Startups are accepted and supported in cohort batches or classes (the accelerator isn't an on-demand resource).<ref>{{Cite web |last=Christiansen |first=Jed |title=Seed Accelerator Definition |url=http://www.seed-db.com/about/view?page=definition |access-date=September 14, 2012}}</ref>). The peer support and feedback that the classes provide is an important advantage. If the accelerator doesn't offer a common workspace, the teams will meet periodically.

The primary value to the entrepreneur is derived from the mentoring, connections, and the recognition of being chosen to be a part of the accelerator. The [[business model]] is based on generating [[Venture capital|venture-style returns]], not rent, or fees for services.

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==Impact==

Whether or not accelerators increase the success of accelerated firms is not always clear. A number of studies have shown that accelerated cohorts perform better than non-accelerated firms, but this is potentially due to the selection effect of programmes (i.e., the accelerators might be good at 'picking winners' rather than creating them). However, studies using [[regression discontinuity design]] show that accelerators can indeed have impact over and above their selection effect, and may also have wider ecosystem spillovers (although this does not necessarily apply to every program).<ref>{{Cite report |author=Jonathan Bone |author2=Juanita Gonzalez-Uribe |author3=Christopher Haley |author4=Henry Lahr |date=2019 |title=THE IMPACT OF BUSINESS ACCELERATORS AND INCUBATORS IN THE UK |url=https://www.gov.uk/government/publications/the-impact-of-business-accelerators-and-incubators-in-the-uk |publisher=BEIS}}</ref>

==Accelerators Exits==