Business+Accelerators

Business Accelerators
Business Accelerators (also know as Venture Accelerators) are a new type of incubator created over the last 3-5 years. There are about 100 of them around the globe. An accelerator provides intensive but short term mentoring and small scale funding. They are frequently industry specific (e.g. typically web application ideas). Leaders include YCombinator [|http://ycombinator.com] and TechStars [|http://techstars.org]. Many accelerators are industry-specific niche accelerators such as FinTech Innovation Lab [] for financial services startups, and Women 2.0 [|http://www.women2.org] for women-founded startups.

World Bank report: **Venture Accelerator Networks:A Review of Existing Models**.

@http://siteresources.worldbank.org/FINANCIALSECTOR/Resources/VentureAccelerationNetworks1.pdf

Venture accelerators and acceleration networks consist of experienced, skilled and well-connected individuals who provide hands-on support to entrepreneurs.They help propel viable ideas to the market through education entrepreneurs through on-the-job training, connecting entrepreneurs, markets, customers, capital, experts, and information through introductions, brokering and role models, by creating bonds of trust and credibility. Venture accelerators validate business ideas at an early stage.


 * **Typical Incubator characteristics** || **Typical Accelerator characteristics** ||
 * Space for rent. || Basic working space, typically rent free. ||
 * Grow in the incubator for 1 year or more, with typically annual rent increases to encourage departure (“Incubation”). || Startup given 8 to 12 weeks to gain some serious traction and make sufficient progress leave in 3-6 months (a “fail early, often, and inexpensively” mentality if there is no business traction). ||
 * Access to general business services and additional professional services if required. || Intense mentoring from teams of mentors with appropriate technical and business experience, investors, lawyers, accountants, media, and other entrepreneurs who have successfully grown businesses. ||
 * Introduction to sources of finance such as angel investors and seed capital funds. Equity in the incubatee business is not typically taken by the incubator. || Most accelerators offer a stipend ($15-25K is typical for 3-6 months) as seed capital although a few offer more substantial seed capital up to $1min exchange for equity in the startup (3-6% is common) - although some have proposed taking substantially more. ||
 * Entrepreneurs are usually from the region in which the incubator is located. || Entrepreneurs may move to the accelerator’s location. ||
 * Incubator companies may make pitches to angel investors or seed funds. || Entrepreneurs have a “demo day” at the end of their stay to show progress and seek outside investment that will keep their company alive for the next period of growth. ||
 * Incubator companies may make pitches to angel investors or seed funds. || Entrepreneurs have a “demo day” at the end of their stay to show progress and seek outside investment that will keep their company alive for the next period of growth. ||

Most accelerators have focused on web-based multimedia startups. It is not yet clear how the methodology works with other technologies such as biotech or engineered products which require a longer development phase. A criticism of accelerators is that they try to fit all new businesses into a fixed model which may not always be appropriate. The accelerator model will probably break down when pieces are missing, including: a lack of successful and experienced entrepreneurs and weak supportive infrastructure. Difficulties in applying the current accelerator model in a developing country have not been assessed.