Setting up a solid model for evaluating accelerator programs is difficult, as there are limited empirical evidence and data history of their performance. However, Michael Fowle from Northumbria University wrote a paper on this issue, which we can highly recommend reading.
The problem is always the same: Startups are fascinating but complex, their ecosystems are complex, and the perfect formula for creating a unicorn is a truly well-kept secret. Accelerators aim at generating successful companies, increasing the likelihood of success and speeding up the process of growth. There are very different approaches to these goals. The magic behind great accelerators is that they allow separate sources of benefits to complement each other. Lighting up brands, raising media attention, boosting KPIs and giving access to community heroes raises the attention of investors. The spiral of success does work better for some and we are always curious to look behind the scenes to understand why.
The amount of money raised and the increase in valuation are two very important KPIs for accelerators. In our perception, you can get a good understanding of how successful an accelerator works one year after the program ended. This is a time period where an investment round should materialize very likely. Why? Because programs last on average 6 months and startups tend to be funded for – at best – an 18 months runway. Our hypothesis is, that startups which have not attended an accelerator program should be outperformed in general by those who have.
At least, we know that this hypothesis is true for leading programs in the field. In our ongoing research, we can see, that well established and top-rated accelerators tend to publish this figure on their websites. Unfortunately, others hide the number deliberately while some just seem to be not aware that the probability of funding is one of the most important concerns of founders. We even get so often asked by founders how to secure funding, that we wrote an article about the 7 most basic tips for convincing investors.
After the overwhelming interest in our Top European Accelerator Study 2017, we even going to dig deeper this year. We added with Community, a new parameter, as you might have seen with our recent poll. We are trying to find some new interesting insights and relations within the datasets we gather. Manager of accelerators will be contacted by our analyst. If you are working for an accelerator and you didn’t receive any notification from us, please contact our analyst directly.
Fowle Michael, Critical Success Factors for Business Accelerators: A Theoretical Context. 2017.
The diagram above explains the complexity of interaction between all kinds of factors within an accelerator. It summarises the influence each theme has on the other. Reinforcing loops continue until one element reaches a limiting value. The challenge for accelerators is to nurture each of these five elements so each expands and contributes to the overall success. There are many types, approaches and measures of success for a business accelerator. Each may have a slightly different purpose, aims and values and each may be accountable to its own unique set of stakeholders.
However, for general success an Accelerator should – according to Michael Fowles:
1. Be located close to the customers for its companies.
2. Focus on the cohort and group learning
3. Create strong internal and external networks.
4. Offer funding as a reward, not a guarantee
5. Integrate with investor networks
6. Build its brand through innovative features, positive associations and remarkable alumni stories.
7. Be selective, choose the best and signal exclusivity.
8. Have a high-quality programme with entrepreneurial coaches and time pressure to achieve goals.
The report on Top European Accelerators 2018 will be published end of February. Get your copy by registering now.