It's no secret that accelerators have become an increasingly common resource for young companies like those looking for strategic guidance and a route to faster growth. Now there's research showing just how ubiquitous they've become. According to a blog post published on Thursday by Ian Hathaway, a non-resident senior fellow at Washington, D.C. think tank The Brookings Institution, the U.S. has been in the middle of an accelerator boom for a full 10 years.
Hathaway finds that there are roughly 172 accelerators in 35 states today, and their numbers doubled every two years between 2008 and 2014. Accelerators have invested in about 5,000 companies, for a total of $2 billion. Those companies attracted an additional $17 billion in venture capital either during or after their participation in the programs, over the same period.
As opposed to incubators, which provide startups with support on a protracted basis, accelerator programs run for a concentrated period of time, usually between three and six months. The curriculum typically involves mentorship, networking, and customer building, and often some venture capital investment.
While you may not be able to draw a clean line between time spent at an accelerator and the long-term success of a business, there's plenty of evidence suggesting that the best ones--such as Y Combinator, Tech Stars, and 500 Startups--have a strong track record of fostering growth and developing business ecosystems that can help build local economies.
"Done well, these programs can be effective at helping some of our most high-potential companies reach goals more quickly and assuredly," Hathaway writes.
Certainly the research is compelling. In the months following their graduation from accelerator programs between 2005 and 2015, companies had a median value of $7.1 million, Hathaway writes. For those that went on to raise venture capital rounds during that period, average valuations jumped to $90 million--and last year, the average was a whopping $196 million.
But there's a big difference between the top accelerators and the lesser-known ones. Startups at top accelerators may get quicker access to customers, venture capital, and exits by acquisition than their peers at other programs. They may also reach these phases more quickly than peers that only get angel funding, Hathaway writes.
Here are three elements Hathaway suggests make for a successful accelerator.
1. Teachers are important
Good accelerators should connect you with mentors and allow you to engage with them over the course of the program.
2. Problems become teachable moments
Programs should clearly articulate the potential conflicts that can emerge between mentors, company founders, and the companies themselves. Those conflicts should themselves become opportunities to learn and grow.
3. Networking, etc.
The accelerator should build a culture and network that will last for the companies' lifetimes. By contrast, less successful accelerators lack a specific vision, just emulate what other accelerators do, or fail to set expectations for what can be achieved, Hathaway's research suggests.
The findings are important, especially because the U.S. is involved in an ongoing conversation about how entrepreneurship is a well-marked path toward growing the economy and providing jobs.
"[Accelerators] have been shown to attract more investors and focus energy on the nascent startup communities that have been spreading throughout the United States, which will no doubt be critical for boosting high-impact entrepreneurship and hard-to-come-by growth in the future," Hathaway writes.