Incubators and Accelerators for Startups

Quick Summary - Startup incubators and accelerators make it easier to raise startup funding and launch a better business faster than ever before. While seed funding is always helpful, that’s not all these investor services offer today’s entrepreneurs. Though these venues are not the only ways to generate startup funding - they are the perfect starting point for a few articles that we want to devote to helping your startup or small business reach the next level in its development plans.

Incubators and Accelerators for Startups - Top 5 List

Startup Incubators

Startup Incubators are mainly for new entrepreneurs, a starting point for someone who says, “Hey, I’ve got a great idea!” Incubators mainly walk you through the process of developing your business idea to an actionable (and potentially viable) business plan. Needless to say, they
help entrepreneurs in the earliest stages of their development.

They provide access to workspace, mentoring, training, and in some cases, seed funding. Incubators come in a lot of different shapes. Some are mainly coworking spaces or open to anyone for a fee. Others only accept the best applicants for more formal programs which may include seed funding for at least some of those who successfully complete their program.

Most are not likely to offer more than $50k in seed funds, and likely less than $20k – if they offer any funding at all.

Startup Accelerators

Notionally for startups at any stage, accelerators can also be beneficial for older small businesses with new ideas and plans for growth, too. The most common participants are startups pushing for their Series A Funding. The vast majority of startup accelerators only accept the “best applications” (sometimes as few as 1-2% of total applicants) for each of their seasons. Seasons are typically 3-4 months long and nearly all require the physical presence of one or more members of your startup team.

Getting into and completing a Startup Accelerator provides a pretty good chance for funding. Startup Accelerators are often sponsored by Angel Investors, Venture Capitalist firms, and private investors. Terms vary widely from one to the next but run in the ballpark of $100k for up to a 5-10% share of your business. While many startup founders will look at the funding as the “main prize” – that’s a short-sighted mistake compared to everything else they offer:

  • Mentoring from industry professionals.
  • Fast-track the learning of all you need to grow your business.
  • Reduced costs and sometimes special terms for essential business services.
  • Critiques and feedback to improve your product-market fit, market strategy, and profit potential.
  • Networking – with the accelerator team, alumni, and fellow participants.
  • Demo Day gives you a chance to pitch your product face to face with investors.
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Our International Top Five List of Startup Accelerators

  1. Y-Combinator – San Francisco, CA – responsible for funding more Unicorns (like Airbnb) than any other accelerator. Y-Combinator is located in the same building as Indiegogo – the Crowdfunding Platform. It’s open for Pre-Series B Startups aligned to its 25 categories of interest. Invests $125k – runs two seasons per year with many participants.
  2. 500 Startups – Headquartered in San Francisco, 500 Startups has offices in dozens of international cities and investments in over 60 countries. Its global reach underscores its mission – “to discover and back the world’s most talented entrepreneurs.” They require a $37.5k participation fee which can be deducted from their $150k Pre-Seed investment. Udemy came up through 500 Startups.
  3. AngelPad – With offices in San Francisco and New York City, it’s consistently recognized as the top accelerator in the United States by MIT. AngelPad accepts only 1% of all applications and offers $120k for a 7% share in your business. Buffer is one of AngelPad’s most notable apps.
  4. Founders Factory UK – Established by Brent Hoberman, George Northcott, and Henry Lane Fox, this accelerator has over 100 specialists on its team. It has offices in London, Paris, New York City, and Johannesburg. They look mainly for companies with products that have already started getting traction in the market and create bespoke programs to accelerate their development. Their program runs 6 months and generally leads to 30-100 GBP in funding for a 4-7% stake.
  5. HighTech XL – Deserving a higher-rank if this list was focused solely on High-Tech Accelerators. Its main office is in Eindhoven, Netherlands at the High Tech Campus where 12,000 researchers, engineers, developers, and entrepreneurs work. High Tech XL collaborates closely with XNode in Shanghai, China. It’s evolved from a high-tech startup accelerator to deep tech venture building – offering something different than typical accelerators.
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Some Final Notes on Startup Hubs

There are a few additional notes to make if you are looking to get into a startup incubator or startup accelerator. San Francisco, and really the Silicon Valley, attracts the most investments and investors – and is home to over a dozen major startups and accelerators. Other major tech cities in the United States and Europe typically offer better startup and accelerators than you’ll find in smaller towns, for obvious reasons.

It makes sense to shop around for an accelerator with a program, specialists, and alumni who fit your niche. While seed funding is always helpful don’t think of it as the main prize – what you learn and the connections you can make (i.e. access to investors) will serve your long-term interests much better. As your physical presence is required, if you don’t actually live in the city where their program is hosted – it’s generally accepted that the “seed funding” can be used to help cover your cost of living during the program.

It is likely that we will expand our list of top accelerators periodically. If you represent an accelerator and would like to have your firm reviewed and possibly added to our list, please give us a shout!

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