The number of startup accelerators in the US has nearly doubled each year, expanding from 20 in 2009 to more than 120 in 2012. You don't have to look far to find an accelerator these days and chances are what was once a Silicon Valley phenomenon is now available locally, whether you are in the US or abroad.
In any industry, especially one experiencing rapid growth, the natural progression is to have a small number of widely known brands at the top with new entrants jockeying to be seen at the same level. If you're a newly formed accelerator, you might be wondering how you compete with the Y Combinators and TechStars on the national scene.
The answer is, you don't. Instead of trying to go head-to-head with the entrenched incumbents and appeal to the startup ecosystem at large, consider how you can separate yourself from the quickly crowding market. There are 3 main strategies accelerators can use to stand out and avoid becoming lost in the noise.
The internet pushes further and further into more industries every day. Health care, education, fitness, real estate, and even construction are all seeing technology-based companies pop up and grab market share. Like a startup that niches down their product to enter an entrenched industry, accelerators should focus on becoming the best within their region rather than trying to compete on a national level against well known brands.
Consider how it has been easier for health care accelerator Rock Health or education accelerator Imagine K12 to stand out from general programs by focusing on their respective industries.
Recent NESTA research found three reasons for the proliferation of accelerators within the technology space. These principles can be used to evaluate the potential for a sector-specific accelerator:
While considering specific industries, also think about your region and how the two intersect. Often there are well-established trades in an area that have both needs that can be filled and a built-in knowledge base. For New Orleans, that may be food and entertainment or in the the Midwest it might be agriculture and farming.
In addition, think about sectors where the initial capital required to get started is decreasing and interest from entrepreneurs to create businesses is increasing, as this will help you build a community around your startups.
NESTA predicts that both physical devices and socially-responsible ventures are areas that meet these requirements and where we may see an increase in accelerator growth in the near future.
Many accelerators try to position themselves as teachers of entrepreneurship, thinking this will attract the best new talent. No matter your stance on whether or not entrepreneurship can be taught, accelerators need to realize that their main mission is to help founders increase their company’s chances of success, and not to provide training from scratch.
They need founders who have already created at least an initial prototype and shown that it’s solving a marketplace need with small but measurable usage, and then help them rapidly accelerate their growth over the course of the program.
Strategies and techniques for distribution, growth, and scaling a company can be taught based on experience and shared knowledge that compounds over time. While you can never guarantee success, you can minimize failure by focusing your resources and capital on companies that are making progress.
Once you start to look at your accelerator program as a fund of companies, your mindset shifts from that of general startup school to developing a unique thesis around your investments.
Based on our research here at Dashboard.io, one of the most commonly cited draws of top startups to an accelerator is access to a built-in mentor network. This represents a big opportunity for differentiation and improvement, as many organizations could stand to raise the bar on their mentor programs.
Often, mentors either have been “out of the game” for awhile and don’t have as much current operational experience as they need to quickly help a founder, or they simply don’t make enough of their time available to startups.
Accelerators should set clear requirements on the qualifications their mentors bring to the table and the amount of time they’ll make available to work with companies. This information should be publically available and tracked continuously so you can ensure your mentors are adding value and make adjustments if they aren’t.
For example, a signal of a quality program that curates it’s mentor network could be as simple as: