The Value of Startup Accelerators

Background Reading:

Boston is known as an epicenter of top-tier universities. While most people think that the main purpose of top universities is to educate top students, from a societal perspective there is a very strong argument that, relative to lower-tier universities, the main role of selective universities is actually sorting, not educating. The empirical evidence for this is that students who are accepted into top universities but choose to attend lower-ranked schools on-average perform just as well economically as those who went on to top universities. Top universities serve as valuable signals to employers and other players of the caliber/innate talent of a particular student, even if lower-ranked schools could have done just as good of a job at educating that student.

On that same note, top-tier startup accelerators are the elite universities of tech ecosystems.  As tech entrepreneurship has become more widespread and the number of entrepreneurs has gone up (as the cost of starting up has gone down), tech ecosystems have become far more “noisy.” More pitches, more teams, more ideas, which overall is a great thing, but it makes it a lot harder for investors to find the investment-worthy companies. Not unlike employers sorting through millions of students.

Here in Boston, Techstars is arguably one of the most notable accelerators, although there are others here and throughout the country. MassChallenge is larger, and less selective. See Seed Accelerator Rankings for more national info.

Ask founders about the educational value of accelerators, and feedback will vary; but almost universally founders will say that the top ones pay for themselves simply from the network they open up for you by putting their stamp on your startup; just like a Harvard or MIT.

Must you attend a startup accelerator to succeed? Clearly not. The large majority of successful companies we work with never touched an accelerator. But for founders lacking strong connections to investors and other key players early on, they can dramatically accelerate a startup’s ability to find capital, advisors, etc.; and should be strongly considered.