The Expanding World of Accelerators
In some ways, it is now difficult to imagine a world without accelerators. Many of the globe’s most well-known and disruptive startups were propelled from the hallways of legendary accelerators such as Y Combinator, TechStars, and 500 Startups. AirBnb, Dropbox, Zenefits, Stripe, DigitalOcean, Heroku, Optimizely, Intercom, Reddit, and hundreds of other startup success stories were all briskly brought to life through the indispensable tutelage and connections of the startup ecosystem’s newest member: accelerators.
And at just over a decade old, accelerators are barely new. Gust’s recent release of the Global Accelerator Reports covering the USA & Canada, Europe, Latin America, the Middle East, Asia and Oceania, (as well as a Global roundup) shows accelerators from around the world have been flourishing since their 2005 inception in Cambridge with Y Combinator. (Indeed, Y Combinator started in Massachusetts!) Since then, hundreds of new accelerators have entered the scene, helping tens of thousands of startups get to their next stage faster and more effectively.
After surveying over 800 organizations across the globe, Gust and Fundacity qualified 387 as accelerators using Miller and Bound’s definition (2011), which defines accelerators as having the following five features:
- An application process that is open to all, yet highly competitive
- Provision of pre-seed investment, usually in exchange for equity
- A focus on small teams and not individual founders
- Time-limited support comprising programmed events and intensive mentoring
- Cohorts or ‘classes’ of startups rather than individual companies
The resulting data and reports depict a promising story for founders seeking the support and guidance of an accelerator. In 2015, nearly USD$200M was invested worldwide into 8,836 startups, with USD$90M coming from the USA and Canada. Europe came in second investing just over USD$41M, and Latin America was close behind at USD$31M.
New accelerators continue to form fueled by corporate sponsorship and, in some cases, successful exits or valuable long-term equity holdings. New and existing accelerators continue to branch out into diverse markets, often inspired by hot new industries such as the Internet of Things (IoT) or drones. In fact, IoT was the market that most accelerators expressed an interest investing in over the next 12 months.
As the infrastructure platform for the early-stage investment economy, Gust is delighted to see the vibrancy of accelerators continue to grow, as well as bring transparency to the market through the Global Accelerator Reports.
This article is intended for informational purposes only, and doesn't constitute tax, accounting, or legal advice. Everyone's situation is different! For advice in light of your unique circumstances, consult a tax advisor, accountant, or lawyer.