With innovations disrupting nearly every facet of today’s business environment, to remain competitive more and more established companies are leveraging the “fresh ideas and approaches” of startups. However, there are other entities that are also investing in these potential disrupters. Startup accelerators provide capital in exchanged for a small percentage of equity.
While at first glance, it may seem that accelerator programs are the same angel investors or other seed-stage venture capitalists, Susan Cohen, professor of entrepreneurship at the University of Richmond, offers the following four characteristics that distinguish the accelerator:
- Culminate in graduation/demo-day
While growth in US-based accelerators did not really take off until after 2008, the first accelerator program was launched by Silicon Valley-based Y Combinator in 2005. According to the Harvard Business Review, in the decade after the opening of the first US accelerator, the number of entities grew to 172 that have collectively invested in over 5,000 startups who have raised a total of $1.5 billion in funding.
Paul Miller and Kirsten Bound describe the accelerator model in a report titled The Startup Factories: The accelerator program model comprises five main features. The combination of these sets it apart from other approaches to investment or business incubation:
- An application process that is open to all, yet highly competitive
- Provision of pre-seed investment, usually in exchange for equity
- A focus on small teams; not individual founders
- Time-limited support comprising programmed events and intensive mentoring
- Cohorts or “classes” of startups rather than individual companies
The challenge for many entrepreneurs in the early stages of their business is that they are not able to fully dedicate their time and efforts to the new venture. The benefit of accelerator programs, is that they encourage founders to immerse themselves in their companies, rather than continuing to pursue them as a side interest.
Looking for more information on the highest rated accelerator programs. The Seed Accelerator Rankings Project (SARP) is an independent, non-partisan research entity that ranks US accelerator programs. According to SARP, the top accelerators in the US are:
- Y Combinator
- Amplify LA
- Chicago New Venture
For AngelPad, one of the platinum plus ranked accelerators, the most important criteria to be accepted into the program is whether the company itself and the concept it is selling are interesting.
“While others have decided to “scale” and take on more companies
or launch more cities, we have stayed true to our original goal:
Find a bunch of awesome companies with founders we would like to
work with and spend three very intense months with them.” – AngelPad
Trying to springboard your venture into a sustainable, growth business? Access/Information has experience researching accelerator programs throughout the country. We can help you find the right fit.