Photo by Chris Liverani on Unsplash

Choosing a startup accelerator program.

In 2021, there are many startup accelerators to choose from. How do you choose which one is right for you and your startup?

  • Seed funding and mentorship in return for equity. The most well-known examples are Y-Combinator and Techstars. These tend to be very selective (aka hard to get into) because they are providing funding. For entrepreneurs these are a very expensive source of capital (YC provides $125K in return for 7% of the company, which is a pretty high cost-of-capital).
  • Corporate accelerators for business development. An example would be Barclays bank, which runs an accelerator program for Fintech (financial technology) startups as part of their corporate strategy to be close to innovation happening in their sector. Terms on these vary, but their goals tend to be around creating a startup ecosystem the sponsoring company can benefit from.
  • University-based accelerators. When I got my MBA, most business schools couldn’t even spell entrepreneurship; they were focused on training corporate executives, not entrepreneurs. Today, my alma mater and many others have some version of a startup accelerator program. At Stanford University, I teach a Stanford Continuing Studies course that is structured similarly to a startup accelerator and I also serve as a mentor in a Santa Clara University program focused on accelerating social ventures.
  • Economic Development accelerators. Many states, cities, and other municipal entities run startup accelerators associated with their economic development (and diversity development) efforts (see this report from the Brookings Institution). The Mayor’s office in LA runs one, Baltimore has an excellent one called Innovation Works, as do even some small towns like Telluride, Colorado.
  • Impact-Driven accelerators. These tend to be donor-supported organizations wanting to create social impact through entrepreneurship. An example is Thought for Food, an international organization that promotes innovation and entrepreneurship in the sustainable food production sector.
  • Fee-based startup accelerators (disclosure: I run one of these). For entrepreneurs who do not want to give up any of their startup equity, fee-based accelerators promise the benefits of a Y-Combinator without diluting the founders by taking some of their equity in the venture.
  • What do you want to get out of it? Is it just funding that you care about? Or mentorship? Knowledge? Connections? Synergies from other participants? As with anything, being clear on your desired outcome is the most important component to making a good choice.
  • Your own finances and the value you place on your startup equity. If you have money, and you want to protect your startup equity, then obviously the fee-based accelerators that don’t take any equity may be the right fit.
  • Stage and Sector Fit. If you have a Fintech startup, there may be some value to being in an accelerator cohort run by a bank for Fintech startups, for example. Also some accelerators tend to focus more on early-stage startups whereas others are more focused on growth stage.
  • The other participants. A startup accelerator is a cohort-based experience, where a good chuck of the value is going to come from the cross-pollination with the other participants. Ask if you can talk to the others in the cohort before you commit. Cross-pollination is where the magic happens.
  • The pedigree. When you are out on the fundraising trail, there is undoubtedly some value to being able to say to investors that your startup went through Y-Combinator (which is said to be more difficult to get into than Harvard). There is much less fundraising value to being able to say you’ve been through Bob’s Diner Accelerator in Iowa (no offense to all the awesome people in Iowa).

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Bret Waters

Silicon Valley guy. I teach entrepreneurship at Stanford, run the 4thly Startup Accelerator, and coach startup CEO’s at Miller Center. Also, I love fish tacos.