I often get asked this question “should we consider applying to xyz”. Over the years we have seen an explosion of various programs all over the world. It all sort of started with the first batch of Ycombinator in Boston. Today accelerators are one of the options early stage companies can consider.

The model behind accelerators is pretty simple: invest little to no capital, host an intensive mentor driven program over weeks or months, produce a Demo Day to connect startups with potential investors. In the early days of accelerators it was hard to say whether this model will yield any significant returns — both for accelerators and startups.

Ycombinator which without any doubt is the most successful and known accelerator started in 2005. In the last 11 years $20 billion in financing have been raised by companies graudating from accelerators. What is more important is that there have already been exits to the tune of $5 billion and there is another $80 billion of potential exit value.

As with everything in the startup world these numbers follow a power law distribution. 75% of the invested capital was deployed in graduates from the following accelerators: Ycombinator, Techstars, 500 Startups, Angelpad. To put it into perspective there are reportedly 200 active accelerators.

Working exclusively with early stage companies I see great value in accelerators. These programs act as magnifying glass and show the good and the bad sides of every team. So, when I get asked by founders if they should apply my answer is mostly yes. The catch here is to focus your energy on the programs that can have the biggest impact on the company. It’s not really a surprise that YC, Techstars, 500 and Angelpad are the top ones. They were early to the game and they managed to build a brand and network. When it comes to Europe, Seedcamp is definitely missing from the list and should also be included.

My experience with accelerators is threefold. We tried to built our own acceleration program and gathered first hand experience as operators. Some companies from our portfolio went through YC, Techstars and 500 Startups. I also mentored companies at Techstars and Seedcamp. If I was to pick one thing that accelerators are good at it would be access to a network of people. This is also the biggest differentiator between the various programs. The smaller/newer the accelerator the less probable it will offer an extensive network to tap into. Choose carefully.

//source of data SeedDB

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I’m a Partner at Innovation Nest, a seed VC fund focused on B2B Software. Helping SaaS founders with growth strategies and tactics.

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