Startup accelerators play a major role in today’s tech world and new accelerator programs are launched almost everyday. According to Natty Zola (TechStars, MD) they became, “a proven way to quickly grow a startup by learning from experts, finding great mentorship and connecting to a powerful network. They provide resources that reduce the cost of starting a company and the early capital a team needs to get their venture off the ground or to achieve key early milestones. They have become the new business school.” In many ways, accelerators have become a rite of passage for thousands of entrepreneurs around the world.
This report from Gust and Fundacity provides an exclusive inside look at accelerator programs around the world. This report is a follow-up on the 2014 Accelerator Report and its objective is to understand how the accelerator industry has developed globally, how accelerators are funded and monetized, while providing insights on the direction of the industry in the near future.
To create this report, we surveyed 836 organizations, out of which 387 qualified as accelerators and shared their data with us.
US and Canada led the wave for new accelerator program launches and reached a peak in 2012. While some regions have reached the peak in 2014/2015, others have not yet done so.
A significant proportion of accelerators are not-for-profit. The Middle East is the only region with a higher share of non profit accelerators than for-profit accelerators.
Not-for-profit accelerators generally do not take equity, and tend to focus on industries with a specific public benefit, such as Health Tech and Edtech. They may also focus on providing new opportunities for minority groups. They may be either privately or publicly funded.
% of accelerators planning to monetize through startup exits per region (short and long term)
Startup exits are no longer the principal revenue source for accelerators. A majority of accelerators depend on alternative revenue sources in the short term, while less than 40% on average do in the long term (12 months and beyond).
% of accelerators planning to monetize through non exit-related sources
In total, 91% of accelerators around the globe are reliant on these alternative revenue generation models in the short term while 75% plan to continue depending on them for the long term.
% of accelerators planning to monetize through corporate partnerships or sponsorships
Corporate partnerships and corporate sponsorships represent the major alternative revenue source for accelerators.
With reference to the data above, exits are defined as mergers and acqusitions, and/or initial public offerings (IPOs) between January 1st 2015 and December 31st 2015. Apart from the US, global exits are still fairly uncommon events and this explains why accelerators have pivoted by diversifying their business model.
By capital invested
United States | Private fund
United States | Private fund
Worldwide | Private fund
Chile | Public fund
United States | Private fund
Latin America | Private fund
United States | Mix fund
Denmark | Mix fund
Worldwide | Private fund
Canada | Public fund
To be notified when selected accelerators open new applications
By number of startups accelerated in 2015
Startups accelerated in 2015
% of accelerators that reported an interest in investing in these markets in the next 12 months
Internet of things
Big data analytics
Social media analytics
What factors have caused growth (or decline) in the startup acceleration scene in your region between 2014 and 2015?
Founder of Angel Pad (United States)
There are good and bad accelerators in any part of the world - the US and everywhere else. The key question is "Can they help companies to accelerate in a massive market and create meaningful and transformative companies?" So far that really has only happened with companies coming from the top 3 accelerators in Silicon Valley. This could change over time - India, China, Brazil, Russia are all huge opportunities."
Co- Founder NXTP LABS (Latin America)
In my opinion, Latin American accelerators have an aggregate differential value linked to the collaborative spirit that is transmitted to entrepreneurs generating a level of relationship more focused on the individual. In comparison to other global accelerators that focus more on the development of the business model, the Latin culture is social and this is distinguished in the process of acceleration. NXTP Labs offers a systematic, pluralistic and interdisciplinary view of relations between innovative technology agents in Latin America. By employing best practices in respective industries, NXTP Labs helps to promote cooperation and further strengthen links between the region and the world, in a context where technology expands exponentially without limits.
COO Startupbootcamp (United Kingdom)
Europe now has some of the best accelerators in the world - with the advantage of years of experience, access to a diverse talent pool and some of the most advanced markets digitally to work within - just take Estonia and their e-Residency!
Founder and CEO BlueChilli (Australia)
The relatively arid, hostile Australian ecosystem breeds hardy, survival-biased startups and a few fearsome alpha predators (like Atlassian, SEEK, Cochlear). Aussie startups are more focused on validating through growing revenue than validating through media buzz or user growth.
Our accelerator ecosystem is younger than other countries and working off a smaller capital base so we don’t have the full detailed history you have when you look at say US accelerators but we have some great early success and relatively speaking, our focus on revenue will mean our average rate of survival at +1, +3 and +5 years will be higher than others.
Head of Accelerator at TLABS (India)
In my opinion, the Asian Ecosystem is still evolving so it will be unfair to compare it with something like Silicon Valley or more mature markets. Accelerators continue to build the ecosystem, advisor network, angels, knowledge and as a result of this effort, there has been a surge in the quality of startups. I think that we are the catalyst of the ecosystem right now.
Asia is the land of opportunities, with India and China leading the way. Owing to the support and ease of starting up these days, there has been a surge in the number of startups lately. Furthermore, with governments supporting funds and accelerators, there is more capital available. The combination of opportunities, large markets, talent and capital availability in itself gives it a upper hand.
The accelerator model was first developed and implemented in 2005 by Y Combinator in the United States. In the last decade, the industry has expanded and evolved exponentially. However the large-scale growth and activity of the accelerator industry is not exclusive to the U.S. Today, accelerators can be found in regions all across the globe. The U.S. and Canada still reign as leaders of the accelerator industry with a total of 111 accelerators investing $90.3M in 2,968 startups. Europe, with a total of 113 accelerators investing $41.0M in 2,574 startups, closely trails the U.S. and Canada. The accelerator industry is also expanding rapidly in unexpected regions such as Latin America, where a mix of private and public capital is fueling a surge in startups and accelerators.
Traditionally, accelerators were similar to VCs and angel investors by relying on the success of startup exits to recoup their financial investments and generate profits. However, most accelerators around the global today are exploring new ways to generate revenue. These new business models include monetizing events, workshops, mentorship, and office space. These alternative funding sources assist accelerators in maintaining solvency prior to startup exits and support program operations. In total, 91% of accelerators around the globe are reliant on these alternative revenue generation models in the short term while 75% plan to continue depending on them for the long term. Corporate partnerships, which include running acceleration programs in partnership with or on behalf of corporations, as well as corporate sponsorship, have also been a key source of funding that supports accelerators before startup exits and are the principal source of revenue in some cases. It is evident from this report that accelerators have pivoted from their original business model.
Globally, accelerators are showing a singular interest in the types of startups they want to bring into their programs demonstrating how globalization has lead to countries focusing narrowly on similar technological boundaries. Accelerators are seeking to draw more startups with a focus on the Internet of Things. Their hope with this hot new market is to identify startups that will produce the next big product or idea.
Within only a decade, accelerators have become a mainstay of startup ecosystems in regions around the globe. Throughout this period, accelerator business models and growth strategies have continued to evolve. In-line with the popularized Lean Startup methodology, accelerators also rely on the proven build-measure-learn process. They identify a problem that needs to be solved, develop a minimum viable product to solve this problem and begin the process of fine-tuning the product to be more efficient and exact. The result is the rise of the Accelerator 2.0.
Accelerator 2.0 - whilst still aligned with its predecessor's original vision of nurturing disruptive companies - is different in a number of ways. These new accelerators possess a diversified revenue model, often focus on a specific vertical, integrate themselves more into the ecosystem, and work closely with governments and corporations. In the coming year and beyond, it will be interesting to see what new pivots the global accelerator industry will undergo, as it adapts.
Due to a current lack of consensus on the exact definition of an accelerator, it was important to define as clearly as possible what an accelerator was to compile the report.
We used the following definition from Miller and Bound (2011), who define accelerators as having the following 5 features:
1) An application process that is open to all, yet highly competitive.
2) Provision of pre-seed investment, usually in exchange for equity.
3) A focus on small teams and not individual founders.
4) Time-limited support comprising programmed events and intensive mentoring.
5) Cohorts or ‘classes’ of startups rather than individual companies.
To collect data, we reached out to two or more team members from each organization. Not all accelerators replied and thus our data is not complete. Organizations contacted were asked to confirm whether they qualify as an accelerator based on the definition above. The data itself was self-reported by the accelerators via an online form. Fundacity and Gust have neither audited the data nor request any supporting documentation.
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