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Time To Thin Out Ineffective Startup Accelerators


If properly managed and matched to local economic need, resources and capabilities,  local accelerators can be a significant local economic asset. However, the problem with so many of these “everywhere else” accelerators, is highly unrealistic expectations to be “the next Silicon Valley“, failure to connect with local economic needs, excessive focus on any and every new Web app, and most importantly, poor management.  It is also apparent to me that many of these more remote smaller communities are so distant from the mainstream economy, that many of the “great ideas” that come out of them, are embarrassingly late.

My guess is that of the estimated 7500 accelerators worldwide, perhaps less than a couple hundred are providing real benefit. The rest are enjoying the current overenthusiastic entrepreneurship bubble,  chewing up vast amounts of public funds and resources without much to show for it.

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RT @bcic: “The Problems with Incubators and How to Solve them” http://t.co/vkS0cnMsZD #bcacceleration

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Two examples of local accelerators doing things right, and winning awards for their efforts, would be Andy Hamilton’s Ice House in Auckland, New Zealand,

icehouse

Read more: Ice House, Auckland, New Zealand

and the Walla Walla Valley (Washington) Wine Cluster Economic Development Project,

Read more: Walla Walla Valley Economic Development Cluster

The background story  involves the economic decline of Walla Walla, whose economy had been based on grain farming, and establishing a wine industry accelerator in the local community college.  The result has been an astonishing revival of the town.

The author of the article below, is making a much too sweeping argument in favor of local accelerators, essentially “all” local accelerators, without much critical investigation or thought as to the vast sums of money being wasted in small communities that can ill-afford it.

6 Reasons to Keep Accelerators Everywhere Else.

There’s an accelerator bubble.

Accelerators, except for Ycombinator/TechStars, are irrelevant.

We should get rid of the Demo Day.

If you’ve been in the startup space for more than a minute, you’ve probably heard someone say something like this. Founders and startup advocates have naturally critical minds; it’s why we can solve complex problems in innovative ways. But, that also means we spend a lot of time second guessing and rethinking every single thing we do.

I’ve had my own doubts about the accelerator model, and they mimic most of the concerns people bring up. There are so many (2000 around the world). What company can really be built in 3 months? It seems that the only real success comes from the big names, so why bother with smaller, local accelerators?

But, this week I was convinced that accelerators everywhere else can be just as beneficial to companies as the more publicized YCombinator and TechStars. Yesterday I attended the Investor Day for Jumpstart Foundry, in Nashville, TN and was duly impressed with what I saw. Of course, they had the bells and whistles–cool venue, great food, open bar. But more impressive were the companies that presented.

Every company had made significant strides in the 3 month program. Most could give detailed explanations of revenue. Quite a few already had traction and are well on the way to making real money already.

Vic Gatto, founder of Jumpstart Foundry and partner at Solidus Company, is well aware of the negative perception accelerators carry.

“We’re definitely a young industry going through definitional challenges,” he told me. He talked about meetings with other accelerators around the world. The leaders of these accelerators are talking about what defines success. Is it funding? Exits? Revenue? Level of mentor networks?

By most metrics, Jumpstart Foundry is finding success. 65% of its graduates are still in business, either bootstrapping or with funding. They have over 100 mentors, and that network grows each year. Gatto insists, though, that another real metric of success will be future exits, and most of the industry is still too young to really see that achieved yet.

One mentor told me that this year’s cohort may be the best she’s seen. “And they didn’t start off particularly special,” she said. “I think that really speaks to how the program itself is growing.”

And, as far as getting rid of Investor Day, Gatto won’t be doing that any time soon.

“That pressure is important,” he said. It’s the deciding factor sometimes when a new founder is tired and wants to call it a night. With Investor Day looming, it’s easier to focus and do the hard work of a young company.

Make sure to check out Jumpstart Foundry’s latest cohort because there are definitely some companies to watch. We’ll cover some of them here on Nibletz in the coming weeks.

In the meantime, here are a few reasons we shouldn’t give up on the accelerators everywhere else just yet:

  1. In the life of a young company, it can be easy to let an idea go when it gets hard. Surrounding yourself with mentors and good advice in an accelerator can help you push through those first stage challenges.
  2. The pressure of Investor Day can give you more traction than you thought possible in 3 months.
  3. Accelerators everywhere else understand companies everywhere else.We’ve talked before about how companies outside of Silicon Valley are innovating in industries besides the Internet and apps. Local accelerators inherently “get” that more easily than accelerators that are used to churning out consumer-facing apps.
  4. A good accelerator can be a rallying point for a whole ecosystem. Yesterday in Nashville, it was a packed house. Not just investors, but anyone interested in the startup scene showed up to support the cohort.
  5. Even if your first company doesn’t succeed, the 3 month MBA you get by doing the hands on work of an accelerator will be invaluable to the next companies you build.
  6. Accelerators may not be perfect, but what is?Anything that spurs innovation is good for the local community as well as for global issues that need creative problem solvers.

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One Comment on “Time To Thin Out Ineffective Startup Accelerators”

  1. dmjylw August 24, 2013 at 11:57 #

    This accelerator fad reminds me of my days at Shell UK in the late 60s. Many of the old colonial countries were becoming independent and the saying was that their badges of legitimacy were a national airline, an oil refinery and a Hilton hotel.

    In North America it used to be that without a convention centre you were nobody: fortunately common sense has prevailed now that we’ve seen the economics of those white elephants. Now everyone wants an ‘accelerator’; no town or city can hold up its head in public without one. In Canada at least we are throwing large sums of public money at these things with little accountability attached. Politicians love them because they can claim to be supporting entrepreneurship, staff love the salaries and local accolades and business ideas that should never have seen the light of day get baby sat.

    I really believe the first step is to cut the public funding for these programs. If the local business and investment community isn’t prepared to put a crowbar in their collective wallets and fund innovation in their community, then the programs don’t deserve to exist.

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