Competition Among Accelerators Benefits Startups

Chicks Hatching

Helping startups succeed is a business unto itself, supporting a myriad of coaches and consultants, lawyers and accountants. Then there are startup accelerator programs, which aim to foster rapid growth among their portfolio companies by providing seed capital, mentorship, access to technology, office space and an innovative community. Up to 2,000 accelerator or incubator programs are available around the world.

Lately, competition among those programs has become fierce, says The Wall Street Journal. Everyone from real estate companies—hoping to develop future tenants—to the federal government is creating incubator or accelerator programs, hoping to emulate the success of Silicon Valley’s Y Combinator, which nurtured Airbnb, Dropbox and several other brand names.

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Increasingly, accelerators have to tailor their programs to attract participants by offering free office space, professional services—such as access to lawyers, marketers or other resources from high-profile firms—and waiving the typical required equity stake. Others are putting their training and mentoring services online to attract founders who aren’t ready to commit to a multi-week, on-site program. Many entrepreneurs won’t or can’t “drop everything and move to Silicon Valley for 12 weeks,” observed Angela Benton, founder of NewMe, an accelerator in San Francisco. Last year, NewMe began experimenting with paid online training courses that entrepreneurs could participate in regardless of location. That’s increased revenue by some 35 percent this year, Benton said.

All of this is good news for tech startups: The situation gives them more options for training programs, connections and seed funding opportunities. The downside is that not all accelerators are stable themselves. Just 18 percent are on sound financial footing, according to one survey, and an MIT study found that since 2005, only 4 percent of accelerator graduates were profitably sold or went public.

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Image: De Jongh Photography