AAA Unpacking the world of accelerators

Unpacking the world of accelerators

It seems that lately many cynical voices in the startup world are not-so-subtly denouncing the role accelerators play in developing companies. Suddenly, in their eyes, there are almost as many accelerators as there are startups.

Yet despite this criticism, the positive impact accelerators have on ambitious startups is evident in the powerful relationship-building opportunities and coaching insights top programmes offer founders. To truly understand and locate accelerators within the greater startup landscape, it is helpful to consider their history and the different forms they can take.

A brief history of startup accelerators

The startup accelerators we see today are an evolution of business incubators first seen in the late 1950s. From this initial workspace-focused model, accelerators emerged in the mid-2000s with the explicit goal of creating a nurturing, mentor-driven environment where startups would thrive. Ideally this supportive community increased the likelihood of a startup finding its secret sauce and gaining rapid growth.

Today, most accelerators are composed of three to four-month programmes where selected startups – usually eight to 12 per class – are rapidly exposed to a talented and diverse network, from mentors to partners. Accelerators also often provide seed funding, free office space, access to technology and other perks – all activities designed to support a startup’s rapid growth.

Different accelerator models

Accelerators have traditionally been founded by angel investors interested in supporting local startup communities or diversifying their investments. Yet recently there has been an explosion of alternative accelerator models, including corporates looking to capitalise on startup talent, governments interested in attracting technical talent, and dynamic multi-programme ecosystems giving startups a route into a global network.

Corporate accelerators: Large corporates are a significant entrant into the accelerator industry. Some of the world’s leading brands are increasingly taking an active role in fostering innovation by supporting startups.

Many companies, including Google Ventures, Telefonica’s Wayra, and Orange Fab, run standalone accelerators themselves, acting as both mentors and operators. While this model leverages company’s existing resources, it can initially be difficult to run quality operations and recruit top startups.

Techstars and others have popularised the “powered by” model, in which a company outsources operations to an existing accelerator. This approach – adopted by Disney and Barclays – shares many of the benefits and drawbacks of stand-alone corporate accelerators while adding value with experienced professionals running quality operations from the start. In this framework, it is vital to align outcomes and expectations across organisations.

Government funded accelerator programmes: Governments have also entered the accelerator space as a way to stimulate growth and nurture innovation. Many have prioritised creating and funding accelerator programmes both to support local entrepreneurs and to attract foreign startups.

The Nordic Innovation House, for example, plays a large role in helping startups raise funding. This jointly funded, hands-on programme supports Nordic entrepreneurs across the region who are looking to access funding and growth opportunities in Silicon Valley. Similarly, the UK government runs the Future Fifty accelerator, which directly connects later-stage startups with domestic and overseas capital.

Despite the unique access government accelerators provide, startups may find it difficult to form meaningful and lasting relationships with these resources. Since startups often do not provide equity to enter government-backed accelerators, a lack of buy-in can make attracting quality programme operators challenging. Similarly, government accelerators are typically limited to supporting startups that meet tight eligibility criteria, making their resources difficult to access.

Multi-programme accelerators: As the accelerator industry has matured, a small group of accelerators have scaled across the globe by producing their own programmes, forming local partnerships or creating targeted funds.

At Startupbootcamp, we have built a global family of 10 industry-specific programmes in a diverse range of industries including smart transportation and energy in Berlin, financial technology in London, mobile in Copenhagen, high-tech hardware in Eindhoven. Our focus on different industries gives us the ability to provide startups with an individualised and tailored acceleration curriculum.

Our corporate partners serve as mentors, demonstrate their products and support our startups before, during and after the programmes.

Accelerators’ impact on startups by facilitating vital connections and building integral growth programmes should not be overlooked. As more budding entrepreneurs decide to create companies, it is even more important for startups to understand the different models and how they can benefit from joining an accelerator.

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