(and hopefully putting it back together in better shape)

This is going to be one of those ‘don’t get me wrong’ intros:

So yes, I’m a serious fan of the idea of supporting innovative startups, but…

I’m convinced we can do a whole lot better on the acceleration front than we are doing right now.

Dear reader, you obviously know what an accelerator is, but…

It may come as quite a surprise to anyone drawn to reading this that most of the general public have never heard of startup accelerators, or even heard of their ‘predecessors’, startup ‘incubators’. In fact, surprisingly few involved in running most kinds of business have ever heard of them either.

In the light of what we’ve just gone through with covid, as well as those scarily darkening clouds over the economic horizon right now, you’d imagine that efforts to get everyone involved in finding new ways out of our economic difficulties would be going into overdrive right now, with both business and government saying ‘let’s just get loads more people to start exciting new startups’,  but…

Investors today see accelerators as ‘yesterday’s brightest hope’

When it comes to using startup accelerators to kick-start innovation, I think there’s a general air of disillusionment in today’s investment community.

There are very good reasons for this: most new accelerators have just turned out to be ‘one cohort wonders’, typically shutting themselves down after vainly struggling to accelerate their very first batch of startups.

Innovation investor attitudes to accelerators? ‘Once bitten… ‘

For many investors, the excitement created by that phenomenal wave of early hype behind accelerators about a decade ago has since been replaced with a battle-worn, wary scepticism.

The reason why so few accelerator programs stay in operation much longer than a year after running their first (usually three month long) startup acceleration program?

Accelerating startup investability? Not so much…

Few of them manage to successfully accelerate or facilitate the investability of many, if any of the projects that they take under their wing, such that few if any of those projects turn out to be genuinely scalable or investable enough to ‘move the dial’.

In this context, moving the dial for an accelerator’s startups is all about ensuring that a sufficient number of them secure post-accelerator investment after demo day, the day at the end of the accelerator program when all of its startup teams present their (supposedly?) accelerated projects to prospective investors.

And if their startups don’t attract investors, guess what happens to the accelerator

The consequence of failing to generate enough interest from investors in an accelerator’s startups once they have supposedly been ‘accelerated’?

Unsurprisingly, the accelerator itself will not come anywhere near to generating its own projected returns on investment, even if those returns are measured exclusively in terms of investment-based ‘increase in the collective equity valuation of its accelerated startups’.

Valuation, valuation, valuation

So ‘projected collective valuation’ will only ever increase if at least one startup in the cohort (and it should obviously be more than one startup that secures investment, accelerator cohorts have typically 15 or more of them) secures a large enough raise such that the accelerator itself can use this statistic as justification for running another round of its program and next batch of startups with any hope of not running afoul of its own investors.

Inevitably, pleading ‘but we’ve learned so much more about how to run the accelerator, we’ll be much better at it next time around’ often cuts little ice with an accelerator’s investors.

We’re sorry, but no.

They will typically be only too keen to cut off funding for any ‘second bite at the cherry’ for a scheme where those eagerly anticipated rates of return based upon successful ‘acceleration of the investability of startups’ actually end up needing to ‘decelerate’ to match the accelerator’s all-too-evident tardiness in reaching ‘escape velocity’.

Yeah, but why don’t accelerators do what it says on the tin?

I know about how and why accelerators fail to accelerate startups and I have the scars to prove it.

I have personally attended, and in some cases been intimately involved in the design of quite a variety of very different kinds of accelerator programs.

Accelerating startups? A truly great idea, mostly very badly implemented

I think it’s about time that just about everything to do with startup accelerators was put under the microscope, simply because I am absolutely convinced that there is serious room for improvement in just about everything they do.

I’ve made a list of seven different stages of accelerator activities and in upcoming articles I’ll use them to start the job of tearing accelerators to pieces and not-so-humbly putting them back together in better shape than they are right now.

  1. announcement: applications from candidate startups are invited and offered incentives
  2. applications arrive: teams send in applications for startup project ideas or existing projects
  3. shortlisting: applicants’ projects are selected for interviews/project presentations
  4. selection: successful applicants join a cohort of project teams for a 3 month* program
  5. resourcing: collaborative workspace, funding for expenses/operational costs is provided
  6. accelerator program: teams attend workspace, events, and receive mentoring for 3 months
  7. demo day: at the end of the program, teams present projects to prospective investors

*three month programs are typical, but programs can last anywhere from a weekend to a year.