Seed accelerator

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Seed accelerators are fixed-term, cohort-based programs, that include mentorship and educational components and culminate in a public pitch event or demo day.[1] While traditional business incubators are often government-funded, generally take no equity, and focus on biotech, medical technology, clean tech or product-centric companies, accelerators can be either privately or publicly funded and focus on a wide range of industries.

The main differences between business incubators and accelerators are:[2]

  1. The application process is open to anyone, but highly competitive. Y Combinator and TechStars have application acceptance rates between 1% and 3%.
  2. A seed investment in the startups is usually made, in exchange for equity. Typically, the investment is between US$20,000 and US$50,000 (or GB£10,000 and GB£50,000 in Europe[3])
  3. The focus is on small teams, not on individual founders. Accelerators consider that one person is insufficient to handle all the work associated with a startup.
  4. 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.[4]
  5. Startups are accepted and supported in cohort batches or classes (the accelerator isn't an on-demand resource[5]). 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 style returns, not rent, or fees for services.

Seed accelerators do not necessarily need to include a physical space, but many do. The process that startups go through in the accelerator can be separated into five distinct phases: awareness, application, program, demo day, post demo day.[3]

History[edit]

The first seed accelerator was Y Combinator, started in Cambridge Mass in 2005, and then later moved to Silicon Valley by Paul Graham.[3] It was followed by TechStars in 2006 and Seedcamp in 2007, and several accelerators of SOSVentures.[6]

With the growing popularity of seed accelerator programs in the US, Europe has seen an increase in accelerators to support a growing startup ecosystem.[7] Top rated seed accelerator programs in Europe include Seedcamp (based in London) and [[Startupbootcamp]] (pan European accelerator with program locations and office spaces based in Copenhagen, Amsterdam, Berlin, Israel, Eindhoven, Istanbul and London).[8]

As of July 2011, there were over 200 startup accelerators in the US and Europe.[6]

Forbes published an analysis of startup accelerators in April 2012.[9]

External links[edit]

References[edit]

  1. ^ Cohen, Susan. "What Do Accelerators Do? Insights from Incubators and Angels". Innovations 8 (3-4): 19–25. Retrieved 6 March 2014. 
  2. ^ Miller, Paul; Bound, Kirsten (June 2011). The Startup Factories - The rise of accelerator programmes to support new technology ventures. London, UK: NESTA. p. 3. 
  3. ^ a b c Lisa Barrehag; Alexander Fornell, Gustav Larsson, Viktor Mårdström, Victor Westergård, Samuel Wrackefeldt (May 2012). Accelerating Success: A Study of Seed Accelerators and Their Defining Characteristics. Gothenburg, Sweden: Chalmers University of Technology. Retrieved 14 September 2012. 
  4. ^ Gilani, Aziz; Dettori, Gianluca (Jul 16, 2011). "Incubators in US and Europe - Speed and scale in capital formation". Kauffman Fellow Program. p. 21. Retrieved 14 September 2012. 
  5. ^ Christiansen, Jed. "Seed Accelerator Definition". Retrieved 14 September 2012. 
  6. ^ a b Gilani, Aziz; Dettori, Gianluca (Jul 16, 2011). "Incubators in US and Europe - Speed and scale in capital formation". Kauffman Fellow Program. p. 4. Retrieved 14 September 2012. 
  7. ^ Johnson, Bobbie (July 18, 2011). "Are Europe’s startup accelerators speeding out of control?". GigaOM. 
  8. ^ Gruber, Frank (June 20, 2011). "Top 8 European Startup Accelerators and Incubators Ranked Seedcamp and Startupbootcamp Top Rankings 2011". Tech Cocktail. 
  9. ^ Tomio, Geron (30 April 2012). "Top Startup Incubators And Accelerators". Forbes. p. 1.