3 of the World’s Best Startup Accelerators / Funds / Ecosystems
One of the key differentiators for our fund is rallying, harnessing, and coordinating a collective of experienced technology company operators, both as angel investors or very experienced entrepreneurs. We want to bring this incredible resource to our portfolio of companies, as well as to the broader Victoria tech scene in a coordinated way that adds high value.
How do we achieve that goal?
We looked south of the border at three top accelerators that we believe are so much more than accelerators: Techstars, 500 Startups, and Y Combinator. All experienced remarkable success in building great startups from founders around the world.
A glimpse into each of these ecosystems:
Techstars was founded by David Cohen, Brad Feld, David Brown, and Jared Polis in 2006 with its first batch of 10 companies in 2007. Seven of these companies either achieved a positive exit, were acquired, or are generating millions in annual revenue. Now operating in over a dozen cities worldwide with a network of 5,000 founders, alumni, and mentors, Techstars is the behemoth of the seed accelerator world.
One of its main differentiating factors is the level of before and after accelerator support. They provide their entrepreneurs with a lifetime access to a network of over 1.5 million people and help applicants by offering founder matching programs. Techstars have partnered with Google to offer a pre-accelerator program to provide mentorship to aspiring applicants. Upon graduation, there is 75% chance that Techstars Ventures will co-invest in companies built through any of their accelerator programs.
With a failure rate of under 10% and an average of over $2M raised in follow-on investments, they’re more than happy to offer an exclusive equity back guarantee to those accepted.
Y Combinator began in Cambridge, Massachusetts with founders Paul Graham, Jessica Livingston, Trevor Blackwell, and Robert Morris. It has since moved the whole operation to Mountain View with the belief that Silicon Valley presented the best ecosystem for founders and their goal was to help them, not Boston.
It is the only one of the three that doesn’t provide office space during the 3-month rotation. Instead, founders are expected to attend weekly dinners to network, show off their weekly work, and learn from the Bay Area’s startup superstars invited to speak candidly about their experience. A strict off-the record policy is enforced and encourages speakers to share secrets not known to the general public. These secrets — which includes botches and blunders — reinforce YC founders of the common pitfalls to avoid along the way.
Founders are also encouraged to attend office hours on a regular basis to receive mentorship from any 16 full-time and 10 part-time experts in their own fields. YC uses their own software to maintain a close watch to ensure availability for these office hours and monitors demand to gauge their usefulness.
Victoria startup SendWithUs has successfully joined YC, meeting many great mentors, and leveraged this into Bay Area venture financing.
500 Startups was Founded in 2010 by Dave McClure and Christine Tsai. Having invested in over 1500 companies across 50 countries, 500 Startups embraces diversity as an investment strategy and for selecting applicants for their accelerator programs. With campuses located in the Bay Area, Mexico City , and Israel and with pre-accelerator programs popping up all over the world, the direction is clearly global.
500 Startups likens its accelerator to the “Startup MBA on steroids” by connecting founders with over 1000 founders, 200 mentors, and staff to provide expertise and training in key startup business areas. Mentors are also dedicated to providing support on strategy, growth and metrics, and pitching to investors.
All three accelerators follow the same basic structure:
- take a group of great entrepreneurs with great ideas,
- guide their companies through a period of intense productivity,
- launch them into a network of motivated investors.
There is a lot we can learn by analyzing how these seed accelerators have supported the entrepreneurs behind their remarkably successful portfolios.
While our fund is first and foremost an investment fund, we too plan to leverage our network of engaged and experienced angel investors to mentor and support our portfolio companies in many ways, including: company growth, business execution, market and product strategy, partnerships, and, ultimately, exits.
General Learnings from the 3 Accelerators:
- Progress is made by stuffing founders into the same space to cross-pollinate, innovate, and push each other further.
- By limiting the accelerator cycle time to 3 or 4 months, founders are forced to iterate and learn as much as possible as fast as possible.
- Each venture has different hurdles and challenges based on the product’s domain. Having mentors with a similar domain provides founders with the right set of expertise and advice.
- Demo days are not just a goal for founders to strive towards; it also creates a competitive atmosphere for investors to drive up valuations.
- Once a seed cycle is completed, support should be ongoing to provide investment opportunities, expertise, and access to alumni.
Key Takeaways For Our Fund:
- Partner aggressively with other funds, angel groups, as well as accelerators to leverage not just for deal flow and joint due diligence, but also networks, expertise, and programs to the benefit of our portfolio companies.
- Maintain an up-to-date registry of our angel investors and venture partners, noting their key experiences, verticals, business skillsets, technologies, and company stages, so we can properly match make and ensure the right mentorship is provided to the right company at the right time.
- Have a scheduled program to support the companies, both individually and collectively. Enable adhoc / JIT company mentorship and support.
Next Steps for us:
Based on the above and the research we’ve conducted to date, we see strong value in selecting efficient ways to leverage our collective of angels.
As such, we have begun to host a series of workshop meetings with our candidate angel investors in order to hear their input and feedback on our plans as we begin to formulate ‘version one’ of our fund’s program.
We are taking a customer discovery / lean startup approach culminating in our MVP for the program. Thus, when the fund launches, we will have a blueprint to operate from, measure, monitor, pivot, and iterate towards an efficient, effective, value-add program for our companies.
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