Seed accelerators are fixed-term, cohort-based programs, that include mentorship and educational components and culminate in a public pitch event or demo day. 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:
- The application process is open to anyone, but highly competitive. Y Combinator and TechStars have application acceptance rates between 1% and 3%.
- 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)
- 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.
- 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.
- Startups are accepted and supported in cohort batches or classes (the accelerator isn't an on-demand resource). 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.
The first seed accelerator was Y Combinator, started in Cambridge Mass in 2005 , and then later moved to Silicon Valley by Paul Graham. It was followed by TechStars in 2006 and Seedcamp in 2007.
With the growing popularity of seed accelerator programs in the US, Europe has seen an increase in accelerators to support a growing startup ecosystem. 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).
As of July 2011, there were over 200 startup accelerators in the US and Europe.
Forbes published an analysis of startup accelerators in April 2012.
- Seed DB A database of seed accelerators and their companies
- Startup Factories European accelerator programmes
- ICC - International Create Challenge ICC - 3-week immersive accelerator program
- Cohen, Susan. "What Do Accelerators Do? Insights from Incubators and Angels". Innovations 8 (3-4): 19–25. Retrieved 6 March 2014.
- Miller, Paul; Bound, Kirsten (June 2011). The Startup Factories - The rise of accelerator programmes to support new technology ventures. London, UK: NESTA. p. 3.
- 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.
- 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.
- Christiansen, Jed. "Seed Accelerator Definition". Retrieved 14 September 2012.
- 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.
- Johnson, Bobbie (July 18, 2011). "Are Europe’s startup accelerators speeding out of control?". GigaOM.
- Gruber, Frank (June 20, 2011). "Top 8 European Startup Accelerators and Incubators Ranked Seedcamp and Startupbootcamp Top Rankings 2011". Tech Cocktail.
- Tomio, Geron (30 April 2012). "Top Startup Incubators And Accelerators". Forbes. p. 1.