The last decade has been truly the decade of the startup accelerator – from pioneering programs such as Y Combinator, TechStars and SeedCamp to the myriad of programs (including more and more “corporate accelerators”) all around the world today, there has never been a better support infrastructure for budding entrepreneurs and their fledgling companies.
The party is about to end.
For beginners, accelerators traditionally always had a hard time making money – they have to run and finance often in-person programs with very real operational expenses and tend to provide funding to their participating startups. All in exchange for a typically single-digit percentage of a startups equity – with no protection (and often no capital to avoid) from dilution. Take into account the average survival rate of a startup and the fact that it takes multiple rounds of (diluting) financing and the initial equity stake is not worth much in the end.
Further accelerators, as in most creative industries, have a natural draw to the stars – the handful of top programs can pick from the most promising startups (as they have a strong desire to be part of the “best” program), the others have to scour the hand-me-downs (the same is true for venture capital – the top firms have the highest returns as they have unique access to the best companies).
And lastly we have seen massive democratization of access to knowledge, tools and, to a certain extent, even networks, which is, of course, good news as now you can have access to the same insights a company going through Y Combinator (wildly regarded the best startup accelerator in the world) by signing up for the free Startup School.
We predict that we will see a large dying-off of these programs all around the world in the next 12-24 months. The top programs will be fine, as will very niche and specialized programs. For everyone else, we might not lose all that much – as we truly live in the best times to start a company ever (and it will only get better).