It seems like every day there is a new accelerator starting somewhere in the United States. Entrepreneurship is hot, and because accelerators like Tech Stars and Y Combinator have been successful, other places think this is the path to prosperity. But is it?
At the Angel Capital Association (ACA) conference I was at I solicited the opinions of several angels. It’s a hot topic. My own angel organization, Hyde Park Angels is hugely supportive of our local accelerator, Excelerate Labs. We also will have an office at 1871, which is not an accelerator but a co-working space.
Many of the angels I spoke with grumbled about accelerators. They see them as plain vanilla. They turn out the same product in variations of industries over and over. It’s an assembly line model in their view. Other angels love them. They appreciate the stream of businesses they allow them to look at and invest in. They like that the accelerators tweak the businesses at relatively low cost and turn the company in the right direction. They also appreciate the network of support the company graduates with. So, opinions are as diverse as the angels.
Right now, there are 1200 accelerators/incubators in the US. Tech Stars is considered the “Ivy League” of accelerators, and operates four across the country. If you read David Cohen and Brad Feld‘s book “Do More Faster” (and I think you should), even they will say that coming through an accelerator isn’t nirvana that guarantees success. But, it can help.
One thing that seems pretty vanilla about accelerators to me is the type of companies many of them invest in. They invest in teams of hackers that create companies that require a lower level of investment. Those companies will hit home runs, or blow out. But, the talent level at them is so good they might recoup some of their investment on an acquisition for the talent only. Because there are 1200 of them across the country, they get a lot of “shots on goal”. One sign of success is that 60-70% of companies that come out of accelerators get follow on funding.