Accelerators – The Past, Present, & Future

Accelerator

Accelerators have been booming since the beginning of Y Combinator in 2005. Yet, Harvard applicants have higher odds of acceptance than applicants to TechStars, Y Combinator, or Fledge. So what is to become of this trend? Will the industry reach saturation? Will accelerators accept any applicant who applies? What does the future hold for accelerators?

Why are there so many business accelerators? 

Accelerators do exactly what their name implies – they accelerate businesses and startups. They provide mentoring, guidance, and resources to entrepreneurs in a condensed amount of time (typically, 3 months). By the end of the program, most startups have the opportunity to gain seed capital, develop their network, and pitch to investors on demo day.

More accelerators are appearing each month, and have been for a dozen years, since the modern business accelerator was launched by Y Combinator. Gust reported in 2016 that 579 accelerator programs have invested over two hundred million in entrepreneurs and startups. Meanwhile, Conveners is tracking more than 750 social good accelerators through its Accelerating the Accelerators program.

This is a stark contrast to 2005, when Y Combinator was the first and only accelerator with just $200K in investment funds.

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The best of these programs accept just a single digit percentage of their applicants.

Most accelerators are industry specific, but being open to the public creates intense competition. Applicants to Stanford and Harvard business schools have higher odds of acceptance than applicants to Y Combinator, Techstars, or Fledge. So what is to become of this trend? Will the industry reach saturation? Will accelerators accept any applicant who applies? Or, are there really so many entrepreneurs that we’re decades away from that?

Much more likely the latter. 

That thanks to the Kauffman Foundation, we know that that over half a million companies get started annually in the United States.  That alone explains why there is no shortage of applicants to accelerators. Furthermore, consider how that number grows if you project those values to the uncounted millions of entrepreneurs around the world.

In reality, the big question, then, isn’t about saturation. Instead, it’s, “How can these programs improve their reach to millions of startups?”

The solution – Accelerator Networks.

Techstars is a great example of this. They started down this road years ago. In 2006, they ran only one annual session in Boulder, Colorado, and now, they operate a network of over 25 programs across the U.S. (plus a few Europe).

A network of accelerator programs, as opposed to multiple stand alone accelerators, results in more efficient programs, diverse networking communities, and streamlined operations. The next wave of accelerators (or existing accelerators) now have the opportunity to join in one of the growing networks. Fledge is following in the footsteps of Techstars. Programs in Lima, Peru and Barcelona, Catalonia/Spain  are replicating the original Fledge program in Seattle, and new programs are joining in 2018 in Padua, Italy and Vancouver, Canada.

Beyond helping the operators get their programs off the ground faster, these networks also benefit the participants in other ways.  Instead of dozens of mentors all from one city, the networks provide access to hundreds or thousands of mentors from dozens of countries. Rather than dozens of connections with local investors, there are connections to hundreds of investors spanning the globe.

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Networks and consolidation are not new ideas. A century ago, there were over 1,000 car manufacturers, and now only approximately 15 global producers remain. Over 100 years, thousands of airlines launched and eventually consolidated into a few dozen large carriers. In 50 years, dozens of cable television companies sprang up, only to be merged into a small handful.

We are in the second decade of the modern accelerator, and we’re just staring to see the inevitable creation of networks. The networks will create better programs for entrepreneurs, which is the whole point of these organizations. It’s a win-win for everyone.

Written by Luni Libes
Founder & Managing Director of Fledge
Edited by Rebecca Cox


Rebecca Cox

Rebecca Cox is a seasoned international traveler and Digital Marketing Specialist at Intellithought. She executes social media and marketing strategies for Funding Sage, which provides valuable information, tools, and resources to entrepreneurs seeking to start, grow and fund a business.