How does Y Combinator earn profit
Which of the 3 accelerator types suits your startup
The direction in which the accelerator programs accelerate your startup depends on who is offering them. Because the different providers also pursue different interests with their programs. Understanding these will help you choose the startup accelerator that most closely aligns with your goals.
So let's take a look behind the scenes at the various accelerator programs. Because behind the common term Startup accelerator They hide very different business models.
Which type of accelerator suits your startup (infographic)
Like Small VC Funds: Profit Accelerators
Startup accelerators are a relatively new business concept from the United States introduced by the Y Combinator in 2005 and TechStars in 2006. The concept has now spread all over the world.
When accelerators first came up, the basic idea was that if they each owned five percent of 100 startups and some of them got very successful, they could make money.
However, accelerators have noticed that they also need their own capital. Otherwise they will quickly be watered down in the course of the success stories: Maybe they hold five percent of the next Dropbox, but then a large VC fund comes along. Because the accelerator has no money for investments in subsequent rounds, it suddenly only owns one percent instead of five percent!
Many US and for-profit accelerators are now building up their own capital. So they can invest together with VC funds that are added later. For this reason, the line between accelerators and VC funds is becoming more and more blurred.
Mainly interested in ideas: corporate accelerators and public accelerator programs
There are already around 90 accelerator programs in Germany, most of them in large cities such as Berlin, Hamburg and Munich and the western German metropolitan areas.
But unlike in the USA, most startup accelerators in Germany are offered by two actors:
- from large corporations (such as Wayra from Telefónica or Vodafone Uplift) or
- by public or non-profit organizations (such as the EIT Climate-KIC of the EU or the XPRENEURS incubator of UnternehmerTUM - my workplace)
The programs focus
- corporate accelerators often refer to their own industry, from media to artificial intelligence and energy to mobility
- in public programs on eligible topics (e.g. climate, high-tech) or regional business models
Which accelerator program suits which startup?
1. VC-like accelerators: For startups that want (and can) grow quickly
Independent accelerators accept the same high risks as VC funds. Unlike VCs - who are looking for more advanced companies with a proven business model - accelerators get on board much earlier. They don't just invest money, they invest theirs Experience and your network in startups.
The goal is to find their candidate get very big very quickly allow. Otherwise the investment is not worth it for them because they only hold around five percent of the company. This is why most accelerators are on the lookout for technology-based startups, especially in software, and to a lesser extent hardware and healthcare.
2. Corporate Accelerators: For startups looking for a shortcut in the market
Accelerators initiated by large companies are of course also happy when a startup becomes the “next big thing” in their accelerator, especially if they are involved. However, your first goal is often different: you want to be the first to have access to new ideas that you can use to improve your own offering or business model. Conversely, they can do the participating startups Access to their technologies and customers and can thus accelerate market entry.
The company is interested in your startup because it can often develop and test innovations more easily and less bureaucratically than it would be able to internally. If your idea is a success, the company is already involved or at least has an initial insight into your business model. As long as startups are also a trending topic, their own accelerator also has a positive effect on the company's image. Founders can use this and from joint marketing and press work benefit of the group.
3. Public Accelerator Programs: For all startups that want independent support
The public accelerator providers are primarily interested in innovative ideas and companies succeed. That’s what they promise positive feedback effects on the region or public institution. (Financial) self-interests play a subordinate role here. Success is more likely to be measured in terms of survival rates, jobs and sales.
And so founders can usually rely on: The common interest is solely the success of the start-up they support.
Does the accelerator program provider say anything about the quality?
10,000 euros is not the reason why your startup should take part in an accelerator program. The real added value lies elsewhere - in contacts with investors or the experience of renowned mentors. Whoever offers a startup accelerator does not necessarily say anything about the quality of the accelerator program.
But: There are now so many accelerators that many experts are already talking about an “accelerator hype” (and many corporations have already ended their programs). The active accelerators are chasing the same startups, and that definitely has a negative impact on the added value they bring.
In summary: the accelerator program has to fit the goals of your startup
No matter who it is offered by: An accelerator must bring your startup closer to its goals. You have to decide for yourself which goals these are - and then apply for the right program. (In the article "How to make it into a startup accelerator", Demodesk founder Veronika Riederle reveals her tips for a successful application to a startup accelerator.)
More on startup accelerators
If you would like to find out more about startup accelerators, you will find a detailed chapter in my book "Startup Financing", including the following topics:
get yourself Startup funding here as hardcover, softcover or Kindle eBook:
📘 Buy "Startup Financing" on Amazon
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