Do they pave the path for startup success?

Executive Summary

Are business accelerators the key to success for early-stage businesses and startups? Many entrepreneurs think so. Since the first accelerator, Y Combinator, was founded in the United States in 2005, the number of accelerators has increased dramatically. More than 180 accelerator programs worldwide have helped some 6,000 companies attract in excess of $22 billion in funding from all sources. Yet, not everyone agrees that participating in an accelerator guarantees that a startup will succeed.

Among the key takeaways:

  • Not all accelerators are equal: Startups should research their options before committing to an accelerator and, once accepted, be clear about what they want to gain from their experience.

  • Accelerators involve trade-offs: Entrepreneurs give up equity in return for seed money and a chance to pitch potential investors.

  • Joining an accelerator isn’t the only way to grow a new business. There are a number of free resources available to entrepreneurs.

Resources for Further Study

Bibliography

Books

Deering, Luke, Matt Cartagena and Chris Dowdeswell, “Accelerate: Founder Insights Into Accelerator Programs,” FG Press, 2014. This comprehensive guide features 230 accelerator programs spread across 46 different countries.

Stross, Randall, “The Launch Pad: Inside Y Combinator,” Portfolio, 2013. A journalist offers a unique inside tour of the world of software startups.

Articles

“Startup competition guide: A Giant List of The Best Business Contests,” Grasshopper Blog, http://tinyurl.com/hr2stvy. A blog compiles a list of pitch competitions across the country, including entry fees, prizes and eligibility requirements.

Fallon, Nicole, “Accelerator Programs 101: How to Apply and What to Expect,” Business News Daily, June 5, 2015, http://tinyurl.com/zphok5q. A journalist offers a guide on how to apply for acceptance to the most popular U.S. accelerators and what to expect from them.

Hathaway, Ian, “What Startup Accelerators Really Do,” Harvard Business Review, March 1, 2016, http://tinyurl.com/jtmpq86. A Brookings Institution scholar provides an overview of U.S. startup accelerators and what they have accomplished.

Wasik, John F., “Help for a Business Idea Trying to Catch Fire,” The New York Times, Oct. 12, 2016, http://tinyurl.com/zcg8g3u. A New York Times writer investigates how accelerators help startups.

Reports and Studies

“Creating Inclusive High-Tech Incubators and Accelerators: Strategies to Increase Participation Rates of Women and Minority Entrepreneurs,” JPMorgan Chase & Co and the Institute for a Competitive Inner City, http://tinyurl.com/zdayvdh. This survey of eight U.S. high-tech incubators and accelerators looks at ways to increase the participation rates of female and minority entrepreneurs.

Dempwolf, C. Scott, Jennifer Auer and Michelle D’Ippolito, “Innovation Accelerators: Defining Characteristics Among Startup Assistance Organizations,” Small Business Administration, October 2014, http://tinyurl.com/z8madvy. This study discusses the metrics that should and could be used to measure the impact of accelerators on startups.

Hathaway, Ian, “Accelerating growth: Startup accelerator programs in the United States,” Brookings Institution, Feb. 17, 2016, http://tinyurl.com/j3zltpw. A Brookings scholar looks at the growth of accelerator programs in the United States.

The Next Step

Financial Incentives

MacBride, Elizabeth, “Dubai Has $300 Million To Entice The World’s Best Startups To Its Accelerator,” Forbes, Dec. 29, 2016, http://tinyurl.com/zkzdjzt. The accelerator program Dubai Future Foundation has a $275 million fund to invest in startups, and in addition Dubai will award about $30 million in government contracts to emerging companies.

Theis, Michael, “Accelerator raises millions to help immigrants start Austin businesses,” Austin Business Journal, Dec. 21, 2016, http://tinyurl.com/hpbnul8. In an attempt to help foreign-born and immigrant entrepreneurs in Austin, Texas, an area business accelerator is raising more than $5 million to help 50 businesses get off the ground.

Vanian, Jonathan, “Samsung Pumping Millions into Artificial Intelligence and Virtual Reality Startups,” Fortune, Jan. 4, 2017, http://tinyurl.com/h962tdr. Tech giant Samsung’s startup investment arm is looking to spend its recently created $150 million fund to finance artificial intelligence and virtual reality startups.

New Accelerators

Ciecko, Brendan, “Museums, startups and accelerators… oh, my!” TechCrunch, Jan. 2, 2017, http://tinyurl.com/zs3sgxa. Domestic and international museums are using the startup accelerator model to gather and mobilize entrepreneurs, tech companies and art innovators.

Collins, Terry, “Startups now have a direct connect with NFL players,” CNET, Dec. 10, 2016, http://tinyurl.com/hbzch4o. The NFL Players Association launched business accelerator OneTeam Collective in an effort to partner with sports-centered companies that focus on fan engagement, data analytics, fantasy sports and more.

Smith, Ryan K., “Bitcoin-Based Startup Aims to ‘Decolonize’ the Diaspora,” Ebony, Oct. 20, 2016, http://tinyurl.com/jgf9c7p. BitMari, the first bitcoin accelerator for African women, targets improving farming productivity among Zimbabwean women while educating them about bitcoin technology as a financially empowering option.

Organizations

AngelPad
https://angelpad.org/
In the past five years, AngelPad helped launch more than 130 companies.

Brand Entrepreneurs Bootcamps
http://brandentrepreneurs.com/
The group offers free daylong sessions providing practical advice for startups in New York City, Boston, San Francisco and Washington.

DreamIt Ventures
3401 Market St., Philadelphia, PA 19104; or 116 W. Houston St., 3rd floor, New York, NY 10012
http://www.dreamit.com
This accelerator has made 210 investments in 194 companies.

500startups
444 Castro St., Suite 1200, Mountain View, CA 94041; or 814 Mission St., 6th floor, San Francisco, CA 94103
http://500.co/accelerator/
This accelerator manages $200 million in assets and invests in more than 1,300 technology startups.

Startupbootcamp
International House – Rainmaking Loft, 1 St. Katharine’s Way, London, E1W 1UN
https://www.startupbootcamp.org/
This was the first accelerator in Europe.

Techstars
1050 Walnut St., Suite 202, Boulder, CO 80302
http://www.techstars.com/
Located in multiple cities including Austin, Texas, New York City, London and Berlin.

Y Combinator
320 Pioneer Way, Mountain View, CA 94041
https://www.ycombinator.com/
The original accelerator, it has funded more than 1,200 startups since 2005 and typically invests $120,000 in each.

DOI: 10.1177/237455680303.n1