The terms “incubator program” and “accelerator program” tend to be used interchangeably in some circles. Which can often be confusing for early-stage startup founders dipping their toes into the startup ecosystem for the first time. But what is a startup accelerator program? And how do you know if your startup is a good fit?
What You’ll Learn
- What a startup accelerator is
- Which are the best in the country
- Why early-stage innovative startups often fare better after spending a few months in an accelerator
- The key differences between incubators and accelerators
- How to determine which is best for your startup
Let’s dive in!
The 31 Best Startup Accelerators in the USA [2023]
Startup accelerators are popping up all across the USA and the world at a rapid pace to connect startup founders with industry experts and investment opportunities that help drive the pace of innovation.
Not all accelerators are the same, however, and there are many variations of everything from whether or not they work with corporate partners, what funding opportunities are available to early-stage startups accepted into their programs, the business models of the accelerator programs themselves, and how many participating companies have graduated their programs and gone on to become success stories.
As of 2023, there are 31 different accelerator programs in the USA that could be considered the “cream of the crop.” Sometimes this comes from name recognition such as Y-Combinator, TechStars, or the Google for Startups accelerator programs. Other programs are at the top of the list because their exit rate from early-stage startups that they’ve invested in is far above the industry leaders, some offer unparalleled access to venture capital, and a few offer a guaranteed shot at finding corporate partners for their portfolio companies.
Here is the list of the top seed accelerator programs in the USA:
- Y-Combinator
- TechStars Network
- 500 Startups
- Plug-and-Play Tech Center
- Google for Startups
- Alchemist Accelerator
- Dreamit Ventures
- Founder’s Factory
- MassChallenge
- Startup Boot Camp
- Angel Pad
- Amplify.LA
- Entrepreneur’s Roundtable Accelerator
- SOSV
- The Company Lab (CO.LAB)
- Union Kitchen
- Newchip Accelerator
- Boomtown Accelerators
- Capital Factory
- Lair East Labs
- Seedcamp
- Startup Chile
- Wayra
- Microsoft Accelerator
- StartX
- Boost VC
- AlphaLab
- Mucker Capital
- MetaProp
- Berkeley
- SkyDeck
Accelerator vs. Incubator: What’s The Difference?
While the names may seem a little esoteric for those who don’t understand the difference, both startup incubators and startup accelerators are extremely well-named for what they do.
What is a Startup Incubator Program?
Startup incubators are designed to incubate the most early-stage startups. Like an egg waiting to be hatched, these programs help turn startup founders with an initial idea into fully market-researched & validated business plans. Incubators offer mentorship and physical space for startup founders to work on their idea alongside other tech startups, with plenty of industry experts to help guide their way.
The business model for incubators is typically fee-based, and there isn’t a stringent timeline on how long a founder can participate in the program. The early-stage startups should be working towards building their MVP by the time they finish the program, but that isn’t a requirement.
What is a Startup Accelerator Program?
Startup accelerators are, as the name suggests, designed to accelerate a startup’s growth. The application process for an accelerator program is far more stringent than that of an incubator because accelerators will often invest directly in an early-stage startup that enters its program. Even with panels full of industry experts and plenty of expertise in the space, the most well-known and successful startup accelerators only have about a 10% success rate of exits from those startups that they’ve invested in.
Time scarcity is an important factor for startup accelerators and the three-month onboarding program was discovered by Y-Combinator by accident. Initially started as a program meant to lure college students to try their hand at being startup founders rather than taking a summer job, the program set that timeline to correlate to college summer breaks. The timeline has now been implemented as a best practice for startup accelerators industry-wide, and research has shown that time scarcity plays an important role in training successful founders.
An MVP is typically required for entrance into an accelerator program, and the programs end with a demo day, during which the founders show off their products & companies to Venture Capital investors.
Top Startup Accelerator Programs
Several unicorn startups (those that gain a $1 billion or more valuation while still private) have been graduates of startup accelerators (Airbnb, Stripe, Dropbox, Instacart), but many of the best-known startups were not (Facebook, Google, Netflix, Amazon). To determine whether there was any benefit to enrolling in a startup accelerator, researchers performed a quantitative analysis of the outcomes of those that took part in the programs vs those that didn’t.
Startup accelerator graduates raise more money & are more successful
To begin with, the researchers discovered that startups that had gone through accelerator programs raised up to 171% more funding than non-accelerated companies. They found that 1/3 of the startups that successfully raised Series A funding options were also graduates of startup accelerators. On top of all of that, graduates also tended to have more traffic to their websites, more employees at their companies, and a higher chance of surviving the critical first few years of the startup’s existence.
Data-based best practices of the top startup accelerators
Additionally, further research used quantitative analysis and interviews to find the data-based best practices that were implemented by startup accelerators that graduated the most successful founders and gave them a significant competitive advantage over non-accelerated companies.
Grouped mentor meetings
One of the many benefits for a management team going through an accelerator program is to gain access to personalized guidance, industry experts, and gaining an extended network of business leaders.
Researchers found that startup accelerators typically approached these mentor meetings in one of two ways: they either grouped all of the meetings at the beginning of the program (to the point where founders had no time in the first few weeks to work on their products), or the program spaced them out over the entirety of the startup accelerators.
The data showed that frontloading all of those mentor meetings actually led to better results. Upon closer inspection, they found that similar themes tended to emerge through all of the founder’s mentor meetings. When those meetings were all grouped together, the founders were better able to recognize those patterns of advice and implement them when building their products.
Fostering transparency within the cohort
Startup founders have an idea that they want to bring to the world, and they believe they are the first to have ever seen the world in this unique way. This often leads them to be extremely worried that someone will discover their idea and steal it, not yet understanding how difficult it is to ideate, build, and launch a startup.
Some startup accelerators empathize with these worries and permit their cohorts to work in a private and walled-off fashion, allowing them to keep their ideas & proprietary knowledge to themselves. What the researchers found, however, was that the accelerator programs which took the opposite approach – creating an atmosphere of transparency between cohorts from regular check-ins and demo days – led to better results.
The researchers attributed this to mitigating bounded rationality – the process by which startup founders identify potential opportunities and figure out how best to take advantage of them (by seeing how their fellow cohorts were approaching similar problems).
A one-size fits all program approach
Even if a startup accelerator program focuses on a specific niche like tech startups, life sciences, FinTech, or something else, there will be companies within the cohort focused on different business partners, enterprise software goals, product-market fit, consumer services, target market, customer acquisition needs, revenue potential, and any other number of differences.
To be respectful of these differences, some startup accelerators allow the management team to create their own unique schedule within the accelerator program to align with what they see as their needs. Others choose a more standardized format, in which all members of the cohort must follow the same program, meeting schedule, and class schedule.
The researchers found that the standardized format led to better outcomes, as the startup founders were not always correct on their perceived needs for what their startups needed to work on. By following the same format, these programs ensure that all startups gain the knowledge that they need to build successful companies.
Where to place the focus
Even though 97% of startup accelerator programs teach business fundamentals to their cohorts, the quality of instruction and where they focus their efforts are not uniform. A research team looked closely at the time spent on specific elements of instruction for low-performing vs high-performing accelerator programs to see what made the difference.
The breakdowns of time spent on specific courses of instruction are as follows:
Low-performing
- 18% on finance
- 15% on business plan management
- 18% on networking
- 11% on presentation & communication skills
High-Performing
- 11% on finance
- 9% on business plan management
- 24% on networking
- 20% on presentation & communication skills
How to apply for a startup accelerator
While you do not have to graduate from an incubator program to be accepted to a startup accelerator, you will have to go through a rigorous application process and fill out an application form. There are a few secrets to success in applying to a tech accelerator program, which we will describe below.
Focus on the correct aspect of your MVP
Firstly, most accelerators will require you to have a functional MVP (Minimum Viable Product) to be accepted. A good definition of an MVP is a working prototype that allows you to gather the most data about how customers will use your product with minimal effort. Many startups put far too much focus on the V (viable) aspect of their MVP rather than the M (minimum).
This does not have to be an amazing or final-stage product to get you into an accelerator. It only has to be something that shows customers will want what you’re selling and allow you to collect data on how they actually use it.
Be succinct
Another great tip for the application process is that succinctness is key. You are passionate about your idea and you can’t wait to show it to the world – they understand that. These programs get thousands of applications from tech startups for every cohort, and can only allow a fraction of those to actually participate in the program.
Just like a resume or job application, consider that the gatekeeper who initially looks at your application will be going through dozens if not hundreds at a time. If you can’t describe your idea & answer questions succinctly, you run an outsized chance that your application ends up on the cutting room floor.
Fill out the sections in a way that invites them to be curious enough to ask questions. Pique their curiosity without overloading them with words. As Albert Einstein famously quipped, “if you can’t explain it to a six-year-old, then you don’t understand it yourself.”
Make your video fun and unscripted
Many startup accelerators require a video to be submitted by the founders as part of the application process. These are meant to give the accelerator an idea of how the key stakeholders interact with each other or a glimpse at the personality of the founder.
While some may see this as merely a “check the box” part of the application process, it is an incredibly valuable opportunity to shine if done correctly. Most startups want to ensure that they express all of the vital information about their startup, so they write a script and rehearse it dozens of times before sending off the video.
The problem with anything scripted, however, is that it often sounds scripted. The accelerator team wants to know your personality, they don’t want to know how well you can read out loud into a camera. Make a bulleted list to ensure you express all of the vital information about your startup, but speak from the heart in an off-the-cuff manner so they can get a feel for your personality.
Remember that the application itself will give them the black & white technical aspects of your idea – the video is meant to tell them about you as a person.
Funding Opportunities
Like every other aspect of accelerators, the funding options that they provide can vary greatly. Many accelerators provide an initial (but small) level of funding in exchange for equity in the startups that are accepted into their program. These funding options can run anywhere from $120k to $500k for the programs that make a direct cash investment.
Other accelerators offer non-cash incentives. The Microsoft accelerator offers Azure credits to the startups that make it into their program. Some are app-based and provide educational opportunities from business leaders and mentors but no funding.
A large portion of the startups seeking an accelerator program are doing so because of the expectation that upon graduation they will have the opportunity to pitch their startups directly to Silicon Valley Venture Capital firms at demo day.
Thankfully there are other key stakeholders in the startup ecosystem today besides Silicon Valley, as the ecosystem has grown far beyond the borders of the west coast. Many accelerators have begun to leverage local wealth managers, hedge funds, and even corporate partners as potential investors for their graduates.
Accelerated startups do have a far greater potential for business development and Series A funding than non-accelerated startups, but a proven customer acquisition model and good product-market fit matter more than which accelerator program you graduate from.
Remember that those accelerator programs that are considered the “best” in the industry only have around a 10% success rate for gaining an exit from those startups that they’ve invested in. If your startup knows where its customers are, how to reach them, and how to grow once you launch, Silicon Valley investors may not be the only (or best) option available to you.
A Startup Environment
One of the key things to look for in a good startup accelerator program is the startup environment or “ecosystem” that surrounds it. There are a handful of key factors that can make or break a startup ecosystem. You want as many of these factors present as possible in the environment surrounding a program that you choose.
There are three main components to a good startup ecosystem, and each has its own subcomponents:
- The startups themselves
- The startup enablers
- The ecosystem service partners
The startups
A healthy startup ecosystem will have its own environment of startup specialists and participants who thrive on helping to bring startups to the world. In a well-functioning ecosystem, these development teams, business development agents, and workers will help build and launch a startup. When it either finds a successful exit, is acquired or shutters its doors, these startup teams will often find a new startup to assist, thereby entering back into the cycle.
Areas with a strong history of startup culture are often full of these startup participants, who are vital to the staffing, development, and growth of new startups hoping to make their way into the world.
The startup enablers
Startup enablers are not a part of the startups themselves, but provide much-needed education, resources, and materials to ensure a startup ecosystem can thrive. Examples of startup enablers are:
- Colleges, universities, or training programs
- Investors of all levels
- Incubators, accelerators, innovation centers, or soft-landing missions
- Coworking spaces
- Agencies, consultants, and freelancers
- Advisory organizations & mentors
- Events (networking)
- Corporations
- Nike, Microsoft, Amex, and PepsiCo have each created accelerators, investment funds, and other programs to support & leverage startups
- Research organizations
The ecosystem partners
Ecosystem partners are outside of the startup space themselves, but each plays their own roles that can greatly enhance & assist the startup culture or harm it within a locality. From a government that shapes the business climate to bookkeepers familiar with the needs of a startup or media who is willing to bring their stories to the masses, these partners play their own, external role in the startup ecosystem:
- Government (local, state, or federal)
- Media
- Service providers
- Bookkeepers and CPAs, IT services, internet & telecom, etc
- Corporations
- Strategic partnerships or competition
- Transportation and location
- Founders and employees of thriving startups need easy access to their offices and travel
Choose your startup accelerator program
How do founders go about choosing the right ones for their startups? To begin with, you need to ensure that you are ready to participate in a program.
If you do meet all of the requirements, how do you find the right fit? Firstly, how long do you think you need? Can you build a launchable product with the appropriate product-market fit within a three-month timeline? Or will you need a six-month program?
Secondly, do you have a specific niche or business model in which you will operate? Accelerator programs can be geared towards a wide net of industries. Some focus on FinTech, life sciences, tech startups, or enterprise software. You’ll also find programs that target B2B vs B2C companies or non-profits seeking to help the world by doing good. As well as many other niches.
It’s wise to focus on a program that focuses on your niche. Hence, a major benefit to joining an accelerator program is the outside expertise. In addition to being around others focusing on similar problems.
If your startup has very specific corporate functionality, look for corporate partners who have developed their own in-house accelerator programs. Take care that if you are applying to fit a specific niche, you do your due diligence.
Accelerator programs like MIT’s Seed Accelerator Benchmark and Google’s accelerator program are obviously highly technical and only for tech startups working on extremely data-based functionality. You don’t want to waste anyone’s time, so ensure that you are applying to the ones with the best fit for your company.
Who Are Accelerators Looking For?
Unlike incubators, accelerators are for-profit businesses. Therefore, their business model requires them to make wise investments in a very risky enterprise.
The reality is that the success rate for most accelerators and Venture Capital firms is around 10%. So when they are looking for companies to invest in, they need to ask one question. “Which company will give me enough Return on Investment (ROI) to make up for the 90% that aren’t?”
Success for an accelerator means one of two things.
- Startups graduate from their program and raise Series A capital to scale their business model and drive customer acquisition.
- Startups graduate and are acquired by a larger company that provides that ROI.
To put it bluntly, accelerators and Venture Capital firms are looking for startups that will require a large investment and provide an enormous ROI – or at least have the potential to do so.
If your company is only looking to gain enough customer traction for a marginal share of the market and takes several years just to achieve break-even or profitability, an accelerator may not be the right option for you. If it has the potential to be an aggressive growth tech startup that could achieve unicorn status, however, you may be a good fit.
Closing
Those who work & live inside the startup ecosystem know the terminology quite well but seem to forget that the very people they cater to – startup founders – are often very new to the world & culture of startups.
Hopefully, this article helped you understand the differences and implications of both, startup incubators and accelerators.
While it is true that graduation from an incubator or accelerator is not required for startup success. These programs can provide a wealth of knowledge, resources, and even cash prizes that can be vital to helping founders determine the best way to launch their new product or company into the world.
If after reading this article you have determined that this path is the right one for you, we hope the information helps you to find the right program that launches you to unicorn status!
