Accelerators have contributed to the success of dozens of tech and web giants; some names on the list include Airbnb, Coinbase, Dropbox, Stripe, and Twitch. These unicorns went on to gain further investment support from some of the biggest names in the business—from JP Morgan to Sequoia Capital.
Accelerators are intense, breakneck-paced, immersive experiences that aim to compress years of learning into a few months. It’s no wonder founders that keep that momentum going are able to capitalize on it.
This is also why leading VCs have to keep up with the best startups in the business. Building relationships with founders before their company is a reality can set you up for future investment opportunities. Here are the top accelerators that produce leading startups, and the value they bring to potential portfolio companies.
Many consider Y Combinator (YC) to be the pioneer of startup accelerators. Founded in 2005, YC now funds a new cohort of startups twice per year, investing $500k in each startup in exchange for 7% equity. YC works “intensively” with the startup for three months leading up to Demo Day when startups present their businesses to an invite-only audience. Some of Y Combinator’s most successful alumns include Airbnb, Dropbox, and Stripe.
YC prides itself on being a group of hackers. “The most important thing we do is work with startups on their ideas,” said Geoff Ralston, President of Y Combinator. This hacker mentality leads to the YC team focusing on “figuring out how to make things people want.”
The volume of companies also makes YC a great place to watch. While some accelerators may outrank them in exit rate, YC still has over 300 exits under its belt and counting. Teams that make it through YC are ready to hit the market with their product “Over the course of three months we usually manage to help founders come up with initial answers to all of [their biggest questions]” Ralston added.
Techstars is another accelerator with an impressive CV. Their list of alumni includes SendGrid, Outreach, SalesLoft, and ClassPass. Founded a year after Y Combinator in 2006, Techstars has helped launch more than 1,000 companies valued at a total of more than $21.3B. The program is three months long and centered around mentorship by connecting would-be founders to mentors and other professionals in the Techstars network.
Techstars runs over 50 accelerators, all over the world, during any given year. These include several vertical-specific programs such as its Farm to Fork Accelerator, which offers startups exposure to FoodTech and AgTech investors. Other accelerators are sponsored by marquee corporate partners such as Colliers and its Proptech Accelerator. Others are locally-focused, regional programs across major cities.
No matter where they’re working (or what they’re working on), Techstars has one goal: to help entrepreneurs succeed. “By bringing together ambitious founders and corporations, Techstars enables innovation through creative, powerful relationships” is proudly touted as a key part of their mission. The Techstars team understands the immense value in relationships and the effect that building (and maintaining) a reliable network can have on a business.
500 Startups is the most active early-stage investor in the world. It leads the global VC market in exits and deal count. Their team has invested in more than 2,600 startups across 81 countries. Leading companies produced by 500 Startups cover a wide array of industries and their portfolio continues to diversify as their global footprint grows.
500 Startups runs a series of different accelerators. Its Flagship San Francisco Accelerator has been supporting disruptive ideas for more than 10 years. The program is four months, during which 500 Startups invests $150,000 investment in participating companies in exchange for 6% equity.
Much like other accelerator programs though, the financial support is far from the most valuable asset. 500 Startups also provides access to a community of peers, a network of established industry leaders, and an intensive, MBA-like curriculum.
500 Startups has launched several other accelerators in addition to its flagship one. Some focus on specific geographies. For example, its 500 LatAm Accelerator is for Spanish-speaking founders who participate in a 16-week program in Mexico City. Others focus on specific stages.
Its 500 Seoul Pre-Series A Program is focused on early-stage startups that are pre-product-market-fit. It’s “an intensive 3-week long program that focuses on product optimization, building monetization strategies, and a marketing funnel.” Still, others focus on specific problems. In 2020, its Kobe Accelerator focused on startups tackling challenges related to COVID-19.
Plug and Play
Plug and Play boasts an elite group of alumni, including fintech leaders Paypal and LendingClub. With a network of more than 50,000 startups and 500+ companies, Plug and Play focuses on connecting changemakers and leading organizations. This collaboration between startups and large corporations can support startup growth and drive innovation at larger companies, and VCs can easily step in to help support that relationship.
Together, Plug and Play’s portfolio companies have raised more than $9 billion dollars. Investments vary from approximately $25k to $500k. And it is stage agnostic, investing in companies from seed to Series C and beyond. Like many other accelerators, Plug and Play offers accelerators focused on different sectors, such as insurtech, enterprise tech, cybersecurity, real estate and construction, and even fashion.
What differentiates Plug and Play from many others is that it doesn’t take equity because they “would much rather invest in your next round of funding fairly.” This can be especially tempting for pre-seed startups hoping to bring their idea to fruition before committing to a share percentage.
The Alchemist Accelerator calls itself the “world’s best accelerator for startups that monetize from enterprises.” With its all-star class of alumni, it seems to be living up to that title. Alumni that went on to a strong exit event include:
- Wise.io, a machine learning startup, was acquired by General Electric,
- Assemblage, a real-time collaboration software, was acquired by Cisco,
- Mobilespan, a cloud security company, was acquired by Dropbox.
The Alchemist Accelerator has incubated more than 500 startups, representing over $1.5B in funding. The Alchemist only accepts about 25 teams per class, offering them $36k or more in funding, taking an average of 5% equity.
Alchemist’s primary differentiator is that it was founded and driven by corporate venture capital investors. If your team is exploring business partnerships with larger companies or wants to build these relationships to expand your value for other startups in your portfolio, you have an opportunity to make new connections with the Alchemist network.
The network has over 3,000 faculty and mentors, and over 5,000 venture investors who have experience helping startups monetize from enterprise expansions. It also offers its portfolio companies access to large enterprises that partner with participants through pilots and investments.
SOSV is a multi-stage venture capital investor that runs a series of accelerators, investing in about 150 companies each year through three- to six-month-long programs. Standout startups like Storyful, True Made Foods, and Getaround all got their start in SOSV accelerators. To date, SOSV has funded more than 1800 companies. It invests in its accelerator participants through a convertible instrument called an Accelerator Contract for Equity (ACE) similar to a SAFE.
SOSV has created a series of different accelerator programs to focus on its mission to support human and planetary health.
- HAX is the world’s first accelerator program for hardware, robotics, and connected devices
- IndieBio focuses on human and planetary health
- Orbit Startups is designed for growth in emerging and frontier markets
- dlab is leading companies in the development of web3, decentralization, and blockchain
To support entrepreneurs in building tangible, physical products, SOSV has a global staff of engineers, designers, and scientists to help accelerate product development, as well as fully outfitted laboratory and maker spaces for founders with more tactical support needs.
Leading investors build the right connections at the right time
Accelerators can catapult startups to success. There are hundreds of successful accelerators that have produced dozens of the world’s most highly valued unicorns. Uncovering the next big disruptor isn’t a guarantee, but starting your search with these leading accelerators can start you in the right direction.
Companies navigating the accelerator world are usually early enough in their journeys that they need support from all directions—everywhere from learning industry knowledge and business operations best practices to finding product-market fit.
Identify accelerators that align with your firm’s investment thesis (you can make this process even easier using enriched datasets that inform that investment decision) and work closely with them to build relationships with new applicants to get a head start on your future deal pipeline. You never know when the next unicorn may rear its horn.