Incubators and Accelerators are two commonly available startup support systems, and as a startup you must know what they are. Incubators have long prevailed in indian startup ecosystem however what is relatively new and exciting is Accelerators! As the name suggest, they put you on acceleration towards growth.
In the years leading up to the dot-com bubble, several incubator programmes started focusing on IT-based startups. The model was based on large investments in single projects, which suited venture capital and had previously been successful. But after the bubble burst and heavy losses were incurred around 2000, the investment sphere was introduced to the idea of shorter incubation cycles-as most IT based products could be developed faster than physical products- and smaller investments in each individual startup; the Accelerator concept took off from there and has grown ever since.
What is an Accelerator?
An accelerator is a entity that provides specially designed startup programs to quickly prepare the startup in early stage to grow faster towards next stage. An accelerator program can be designed for various stages of start ups depending on what they need in every stage, including advice, mentorship, funding, network connections, and other resources. Certainly an Accelerator is different from an incubator in various ways, an incubator focuses on providing physical resources like infrastructure, etc, mitigating costs of starting up and also provide accelerator programs, however an accelerator is specifically designed around mentorship, close guidance and preparing a startup to get self sustained, either by its own accruals or in most cases by raising funds.
Also Incubator may subsidize the cost but still take something from the startup as payment, which may be alongside with few % of equity also. However an Accelerator is largely based on equity based incentive model and not fixed cost.
Why should a Startup go for an Accelerator program?
On joining an Accelerator programme a startup gets the opportunity to cut their learning time almost in half. It puts a pressure on the startup that motivates them to design a deadline and basic framework for getting there. The peer support and feedback that the classes provide is an advantage that helps with this. The chance to meet people in the tech industry, both from successful startups and in larger tech businesses and gaining a network of seasoned mentors; introductions to investors and face-to-face time with them; the benefit of mentorship in a controlled environment helping a startup understand what to do and more importantly what not to do, these are all advantages difficult to find outside of the particular environment.
And also, acceptance and successful completion from an accelerator gives your company often validation as a ‘promising startup’.
All these factors come into account during the comprehensive process that startups go through in the accelerator and can be separated into five distinct phases:
Awareness – The awareness phase refers to the time when a team becomes aware of the existence of an accelerator. The success of the accelerator in this phase depends on the strength of its brand and how it markets itself. Startups can keep a lookout for new Accelerators or openings for new batches through social media or your network community or events.
Application – Usually a web based, the application process for an accelerator is highly competitive. Thousands may apply in a season but only a small number get through when a new batch opens up. The programme is focused on small teams instead of individual founders. Accelerators rarely take on startups with individual founders as the workload can become too intensive. Due to the short duration cycle, Accelerators often require at least one person in the team to possess technical skills because a product cannot be developed or worked upon in just 3 months without a skilled coder.
Programme – During this phase the startups focus on developing their products. The 2-6 month intensive mentoring and training that startups receive and are expected to iterate rapidly. They are accepted and supported in cohort batches or classes and must ‘graduate’ by the given deadline.
Demo Day – The program usually ends with a Demo Day, which gives the startups an opportunity to meet with investors. Post the completion of training the startups presents their final idea and concept and connects with the investors.
Post Demo Day – The last phase involves the time after demo day. The startup has now finished the program and has to manage on its own. In most cases this is the point where startup has to become independent of the accelerator unlike an incubator which might keep supporting companies even after the average stipulated period if startup needs are not met.
Notable Accelerators in Global Market
|Accelerator||Founder(s)||Year||Area||Some Portfolio Companies|
|Y Combinator||Paul Graham||2005||USA||DropBox, AirBnB,Redit|
|TechStars||David Cohen||2006||USA||BirdBox, MobiPlug, OnSwipe|
|SeedCamp||Reshma Sohoni, Carlos Espinal||2007||Europe(London)||Hooplo, Kublax, Crashpadder|
|Extreme Startups||(Team-) Andy Yang,Sunil Sharma||2012||Canada||MyShoeBox, Kera, Shoplocket|
|500 Startups||Dave McClure||2010||USA||Instamojo, SendGrid|
|Springboard(now part of TechStars London)||Jon Bradford||2009||Europe(London)||Teddle, Tray.io, Birdback|
|AngelPad||Thomas Korte||2010||USA||Vungle, Mopub, Astrid|
Notable Accelerators in Indian Market
|Accelerator||Intake Stage||Size of Funds/ Investments||Founder(s)||Some Portfolio Companies|
|GSF India||Minimal Viable Product (MVP)||$25-30K for 5-8% equity||Rajesh Sawhney||Biosense, Zipdial, Violet|
|The Morpheus||Idea/Prototype||Rs.5 Lakhs and 7% to 12% equity for the startup accelerator program lasting 4 months.||Sameer Guglani, Nandini Hirianniah, Sarvjeet Ahuja||Akosha, iDubba, InterviewStreet, YourBus|
|TLabs||Idea/Prototype||Invests Rs.10 Lakh for a 10% stake||Gautam Sinha, Abhishek Gupta, Lalit Bansal, Arpit Agarwal, Abhimanyu Godara||Dataweave, Virality, BlueGape|
|5ideas||Early stage startups||2.5 crore per startup and deep collaboration for 6-12 months and 5 startups a time||Pearl Uppal and Gaurav Kachru||N/A|
|Microsoft Startup Accelerator||Idea/Prototype||No investment by Microsoft, just connects them with Venture Capitalists||Mukund Mohan||HealthifyMe, AmplyfyMe, NowFloats,Sparsha|
|The Hatch||Idea||Around Rs.10 Lakhs and a higher amount in select cases.||Anupama Arya, Puneet Vatsayan and P. K. Gulati||All School Stuff, Tune Patrol and Go Gobble|
|Venture Nursery||Idea/Prototype||Associated Angel investors may invest up to INR 25 Lakhs in a start-up. Startups will give 3% sweat equity to Venture Nursery on admission||Ravi Kiran and Shravan Shroff||N/A|
People You Should Know About
All well recognised names in the startup ecosystem, these are the people you want to pay attention to, take advice and learn from.
Gautam Sinha (TLabs) – TLabs was launched under Times Internet. Gautam Sinha joined Times Group in 2007 as CTO, and is currently Director and heads all aspects of technology and eCommerce. In his capacity, he leads and drives the technology strategy, vision and execution for all the internet, mobile and telecommunication properties of the group. Has over 24 years of experience.
Gaurav Kachru (5ideas) – Currently Founder of 5ideas, Gaurav has over 15 years of experience with startups and businesses. Has previously worked with Smile Group and founded DealsandYou. Over the past decade, he has been part of over 10 successful transactions, has evaluated over 20 models for investment in India and has led investments in four.
Harish Bahl – Harish is an entrepreneurs in the Indian internet industry with over 14 years of experience. He founded The Smile Group and various internet ventures under his belt including Tyroo, Zoomtra, Squad Digital, FashionAndYou and HealthPA.
Mahesh Murthy – Mahesh has 29 years of experience helping big brands with marketing counsel, 19 of these have been in digital media and 13 years helping startups with marketing counsel and funding. A well known venture capitalist, he is the Founder & CEO of Pinstorm and Co-Founder and Managing Partner of Seedfund.
Mukund Mohan (Microsoft Accelerator) – Mukund is the CEO in residence at the Microsoft Startup Accelerator and is an entrepreneur with experience spanning 15 years in direct sales, marketing and product management and alliances / partnership in software and Internet industries. He has founded and sold companies (BuzzGain, a leader in Do It Yourself PR, to Meltwater) in the Internet and Mobile domains. Has also invested in the seed stage at 7 startups in India (over 3 years) and 27 in Silicon Valley (over 10 years).
Pankaj Jain – VC and representative of 500 Startups in India, he has more than 15 years worth of experience in the financial services industry providing technology and management services around back office processes, technology, and management for the financial services industry in the US, Europe and India, specifically, hedge funds. He has also founded Teknatus Solutions and HeadStart Network Foundations.
Puneet Vatsayan – Puneet is the Co-founder and Chairman of The Hatch Incubators and Co-founder of the Angel Investors Consortium. In addition, Puneet is actively involved as a member the CII National Committee on IT / ITES and E Commerce. As an entrepreneur he founded 3 ventures – all in the technology and IT domain in India and Silicon Valley.
Rajesh Sawhney (GSF India) – Rajesh is the founder of GSF Accelerator. Rajesh is also the founder of GSF Superangels network and curator of the Global Superangels Forum. He is the co-host and curator of Founders Forum India. Rajesh has made over 15 investments as an active and engaged angel investor.
Sameer Guglani (The Morpheus) – Partner at Morpheus Venture Partners & entrepreneur with experience of more than 10 years and 5 startups. Has previously worked with Seventymm and co-founded Madhouse Media. He focuses on things like strategy, product, sales & marketing etc.
Siddharth Talwar – Siddharth is well known VC/PE Angel Investor. He has founded Evolve Services and previously worked with Skadden, Arps, Slate, Meagher and Flom LLP in Los Angeles.
Vijay Anand – Known as The Startup Guy, Vijay is the Founder of the accelerator The Startup Centre, Proto.in, and partner in Grey Squared Innovation Services. He has over a decade of experience in IT and startups, previously having worked with Arogyam Organics, NASSCOM and IITM’s Rural Technology and Business Incubator.