Why Accelerator Goals Should be Considered in your Selection Process

by Luisa Bohland, Leuphana University of Lüneburg, Germany

Which accelerator program should I apply to? Are there differences between the programs that affect the outcomes for me and my startup? These are important questions you should ask yourself if you consider applying for an accelerator program. Because in fact, previous research has identified different types of accelerators, each supported by different investors who in turn pursue their own goals. And these investors’ goals seem to strongly influence the focus of the respective accelerator.

The deal-flow maker is funded by equity investors, such as business angels or venture capital funds, who aim to identify interesting investment opportunities and make a positive return. Thus, the program provides seed financing to its portfolio companies in exchange for equity. It focuses on a quick development of its predominantly more advanced ventures. Although these goals are of self-serving nature, they can have favorable outcomes for your company. If you prefer a fast and profitable development instead of personal education, this type might be the right choice. Nevertheless, you have to keep in mind that its underlying objectives could be detrimental if your company has individual needs that would require more time and personal advice.

The ecosystem builder is typically established by large and existing companies who are driven by own strategic reasons, such as gaining an understanding of current market trends or further development and integration of your products and services. The accelerator enables networking opportunities to lead customers and focuses on developing its entrepreneurs. It provides experimental learning opportunities, so that even if your startup turns out to be unprofitable, you can become a potential employee. Thus, it’s more responsive to individual needs, although it’s driven by self-serving objectives, too. However, problems could arise if your initial idea evolves towards an industry, that is not of great interest for the shareholder company. Therefore, if you have a fully developed idea but lack knowledge and contacts in a particular industry, you should consider the ecosystem builder.  

The welfare stimulator rather focuses on developing the entrepreneurial ecosystem. It’s typically government-driven or university-based and aims to stimulate startup activity and economic development, either within a specific region or technological domain. Thus, it often selects ventures in an early stage and has well-developed educational components, such as training sessions and workshops. In contrast to the ecosystem builder, it mostly offers seed investment and equity engagement on which the investors aim to make return. If choices have to be made that support the accelerator’s social mission and simultaneously undermine its financial goals and vice versa, tensions, that could be disadvantageous for your company, can be expected.

Taken together, the answer to the question if different accelerator types have different outcomes for you and your startup is yes. But keep in mind that it has to be empirically observed how strong these differences are and if interactions between the different goals of an accelerator influence this strength.

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