accelerating success: a study of seed accelerators

- Intro -Accelerating Success acceleratorstudy.com

Accelerating SuccessA Study of Seed Accelerators and

Their Defining Characteristics

May 15th, 2012 - Gothenburg, Sweden


Dropbox - an Accelerated Success

• Participated in Y Combinator in 2007• Now valued at over $5 billion


Outline of Presentation• Background to thesis and accelerators

• Research question

• Method and research design

• Case studies of accelerators

• Findings from research

– Stakeholder Perspective

– Organization Perspective

– Process Perspective

• Conclusion

- Background -Accelerating Success acceleratorstudy.com

Why Study Accelerators?

• Explore a new phenomena – little has been written about accelerators

• Chalmers Innovation, our stakeholder, interested in the accelerator model


Chalmers Innovation

• A business incubator in Gothenburg, started in 1999

• Picking up new trends from Silicon Valley, Lean Startup and accelerators

• Startup Spring Camp 2012• Interest in further developing their activities

related to early-stage software startups


Software Startups in the Past

• Boo.com – an internet clothing retailer• Burnt over $125 million of venture capital

in 18 months• 8 offices and over 400 employees• Launched in 18 countries simultaneously

in November 1999, bankrupt in May 2000


Incubators – the Predecessor of Accelerators

• First incubator established in 1959• Provides basic necessities for operating,

such as office space and administrative aid• In some cases also provides access to

advisors and investors


New Methodologies

Customer Development Lean Startup


Decreasing Costs for Starting New Ventures

• Cloud services enable instant scalability• Open source software provides cheap

ready-made solutions• The huge venture capital investments not

necessary at the early stage anymore


The First Accelerator: Y Combinator

• Founded in 2005 in Silicon Valley• Today over 200 different accelerators world-

wide


Characteristics of an Accelerator from Startup Factories

• An application process that is open yet highly competitive.

• Provision of pre-seed investment, usually in exchange for equity.

• A focus on small teams not individuals.• Time-limited support comprising programmed

events and intensive mentoring.• Startups supported in cohort batches or

‘classes’.

- Research Question -Accelerating Success acceleratorstudy.com

Research Question

What defines a seed accelerator and which aspects are useful for Chalmers Innovation?

- Method -Accelerating Success acceleratorstudy.com

Method Used for Thesis

• Roadmap created using secondary information from articles and blogs

• Built theory from case studies on accelerators in Europe and the US

• Collected material was used to form the analysis consisting of three perspectives

- Method -Accelerating Success acceleratorstudy.com

Iterative Method Used

- Case Studies -Accelerating Success acceleratorstudy.com

Case Studies of Accelerators

• American: Y Combinator and TechStars, data collected from secondary sources

• European: The German Silicon Valley Accelerator, Springboard, Startupbootcamp, Nordic Startups, betaFACTORY and Startup Sauna, data collected from interviews


Y Combinator and TechStars

• Two of the first accelerators, now defining the standard of an accelerator

Founded in 2005Mountain View, California (Silicon Valley)2-10% equity11 000 – 20 000 USD funding65 teams in last batch

Founded in 2007Boulder, Colorado6% equity6 000-18 000 USD funding9-12 teams in each batch


Founded in 2012Berlin, GermanyNo equityNo seed funding6 teams in each batch

Founded in 2009Cambridge, UK6% equity£5 000 - £15 000 funding10 teams in each batch

Founded in 2010Copenhagen, Denmark8% equity15 000 € funding10 teams in each batch

Founded in 2011Stockholm, SwedenNot operational

Founded in 2011Oslo, Norway6-8% equity5000 – 15 000 € funding5 teams in first batch

Founded in 2010Helsinki, FinlandNo equity1500 € funding15 teams in each batch

European Accelerators

- Analysis -Accelerating Success acceleratorstudy.com

Analysis of Accelerators

• The collected data was analyzed and common themes in the accelerators was triangulated

• These were summed up in three perspectives– Stakeholder– Organizational– Process


Stakeholder Perspective

• Startups: contact with mentors and investors, quality assurance

• Investors: due diligence, deal flow• Mentors: pay-it-forward, keeping up-to-date, meet

with interesting people • Society: innovative environment, job creation


Stakeholder Pyramid


Organizational Perspective

• Few employees in the organization• Mentors work for free• Business model differs, often equity-based

with private investors but sometimes government or universities


Process Perspective

- Conclusion -Accelerating Success acceleratorstudy.com

Conclusion Reached in Thesis• An accelerator act as a hub, connecting the three main

stakeholders: mentors, investors and startups. • The accelerator organization consists of a few employees that run

the day-to-day operations and facilitate the interaction between the stakeholders. Mentors do not receive monetary compensation from the accelerator.

• The processes in an accelerator can be divided into five distinct phases; awareness, application, program, Demo day and post Demo day.

• The accelerator accept teams based on the composition of the teams rather than their idea.

• The teams in an accelerator are small consisting of two or three people and the team is at an early stage that require intensive mentoring and iteration of their idea.

• An accelerator can be seen as a service provided to investors

- The End -Accelerating Success acceleratorstudy.com

Thank you!

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http://www.acceleratorstudy.com/

accelerating success: a study of seed accelerators

Technology

funding10 teams

small teams

usd funding65 teams

silicon valleytoday

nordic startups

startup sauna

startup factories

y combinatorfounded