Where to start a Unicorn: comparing best world accelerators

21.03.2019


What leading accelerator — Y Combinator, 500 Startups, Techstars, AngelPad — suits your company best?

The President of one of the leading world accelerators Y Combinator (YC) Sam Altman left it on 10th March 2019. Why did it stir up the tech start-ups and what is the alternative?

Accelerators free of charge or per minor share teach businesses having sometimes the sole idea how to create and scale up the company to the world’s top level. They mentor the current work, meeting the heads of the largest corporations, opening the access to the direct investment.


The top 100

The accelerators’ efficiency is the cost of the companies they accelerated. Some of them would star in IT world all by themselves, but general statistics can reveal the tendency. To rate we used accelerators’ websites as well as leading business mass media and venture resources: TechCrunch, Seed DB, CrunchBase, CB Insights, Forbes, Techstars, Inc. and etc.

YC — is the no 1 at the market. 19 unicorns (companies which cost over $1 bln) have grown from the start-ups that went through its program. It makes 6% of all companies with capitalization of the kind in the world. Among them are Airbnb, Dropbox, Reddit, Twitch, Quora and others. Also YC has 93 companies with over $100 million. The headliners among the venture funds - Andreessen Horowitz, Khosla Ventures, Sequoia и Accel often invest to YC start-ups.

General capitalization of 100 best companies that went through the accelerator is $100 billion. They have created 28 000 high-paid working places for the country’s economy.

500 Startups is No.2 in achievements. Its unicorns’ portfolio added 7 start-ups during 2018 and it reached 10. The most known are e-mail service SendGrid, SMS-service Twilio, as well as Grab, Canva and Ukranian GitLab, where YC also invested. 500 Startups portfolio has 66 companies now evaluated over $100 million. The accelerator’s strategic investor is ADFG fund from UAE.

Techstars, according to its website has 8 unicorns, including cloud service provider DigitalOcean, SendGrid and Twilio, as well as 37 of the companies over $100 million.

AngelPad (AngelPad ) in Seed Accelerator rating, made by MIT/Brown University, share first place with YС. There is one unicorn in its portfolio – delivery service Postmates — and two co-investments to SendGrid and Twilio.


What are the terms of the business deals?

The cost of the deal in YC with start-ups, starting from 2019, has grown from former $120 000 to $150 000 for 7% in the start-up. Before 2013 года фонд DST Fund of Yuri Milner together with SV Angel automatically invested $170 000 into every graduate of this accelerator. Starting from 2013 Khosla Ventures replaced Yuri Milner, and the cost was decreased to $120 000.

500 Startups gives start-ups $150 000 for 6% share, $37 500 are deducted for participation in the program. Techstars gets 6% share for $100 000. Additionally the team is granted $20 000 to accomodation. AngelPad takes 7% of the start-up for $120 000.

Techstars, 500 Startups and AngelPad provide a place, where start-up founders, supervisors and mentors of the programs work closely together and claim this to be their advantage. YC implies that teams work from home, so nothing would distract them from coding and attracting users.

All accelerator programs give the students access to Amazon, DigitalOcean, AdWords, the cost of which is equivalent to hundreds of thousands of US dollars. Still they do not focus attention on this.

Terms of accelerator programs


Accelerator

Investment

Share

Tuition

Accommodation

Duration

Compulsory presence

YC

$150 000

7%

N/A

N/A

3 months

N/A

500 Startups

$150 000

6%

$37 500

N/A

4 months

Yes

Techstars

$100 000

6%

free

$20000

3 months

Yes

AngelPad

$120 000

7%

free

N/A

3 months

Yes


Programs contents

YС program consists from weekly mutual dinners, office hours and a demo day. Dinners are attended by the former graduates and partners of Whatsapp and Airbnb founders’ level, who consult on sales growth methods, scaling and etc. Office hours are meant to discuss strategy and focus with the accelerator’s successful graduates, colleagues and partners. The group meetings with the team and mentors are held here to solve urgent matters.

A demo day is the climax of the program. It lasts for three days. The team has 2 minutes to make the audience interested with the final results of the 3-months run. This year 200 graduates are expected. They are watched by 450 investors.

One-off events are also held so the participants can present their products to each other and test their presentations. We can suppose that Sam Altman’s exit from YC presidency will not influence the program, he still stays the accelerator’s partner.

Techstars, unlike YC, divide the program into several phases to be worked through with mentors: goal achievement, educational program and demo-day. The first month the start-ups get the most feedback on the product and market from the daily meetings with experts. Short speed-dating for start-ups and partners grow to close associating with permanent mentors.

Educational content includes lectures and workshops on market research, legal nuances and other aspects of the start-up activity.

The second month goes to creating product and attracting clients. The last month is preparation to the demo-day: presentations, investment fundraising and scaling. The demo-day’s audience is about 400 persons, consisting of private investors, funds, corporations, business angels. 30 to 50 stage performances of the start-ups are held.

500 Startups is structured alike Techstars and focused to grow lacking competency due to 200hrs education content. The tuition by lectures and workshops is weekly differentiated in separate topics.

AngelPad has alternative approach. Instead of fast scaling to numerous cities and countries, as other accelerators do, it works with a group of 15 start-ups, helping with sales and product development. The demo-day does not include pitches, as all participants are mixing and know what the others do.


Investment

YC, Techstars, 500 Startups and AngelPad invested in 1900, 1584, 2210 and 140 companies correspondently, while the general investment volumes comprised $27,66 billion, $6,51 billion (according to the Fund’s representative), $2,35 billion и $1,65 billion correspondently.

Each company got $17,9 billion, $4,7 billion, $3,4 billion и $12,3 billion investment in average. This article gives an approximate data, as they are received based on the above-named websites of the venture industry, such as Crunchbase, and some deals can be missed out.

The main result for the start-up is the profit it brings to the investors. That is why we decided to add the number of exits.

YC made 556 exits approximately for $6 billion. According to Techstars representative, its graduates made 178 exits with public data their total cost is $3,5 billion. 500 Startups opened only number of exits – 551, AngelPad scores 29 exits of its graduates with total cost of $868 million.

After the demo-day start-ups of 500 Startups and YC attract in average $1,5-2 million each, Techstars graduates attract about $1 million. According to co-investor of YC, Terence Young, 90-95% graduates of each group of this accelerator get investment. Thus, getting into this accelerator’s program gives the participants not only the new connections, but serves as an indicator for the investors that the start-up has a large potential.


What are the choice criteria and which program to choose?

To go through the first program selection one needs to be fluent in English, no copy-paste in your application, the idea and understanding the ways to realize it. Citizenship and other parameters are not important, Russian founders were also the graduates of these accelerators. YC is focused on highly-motivated to fanaticism technicians with far-reaching vision, easy to self-educate, able to solve tasks in non-trivial manner and attract users and talents.

The advantage of 500 Startups is skill-upgrading with the viable ideas teams’ experience, striving to win American market and no experience to have US-based business. To those, who have business outside the Silicon Valley are best suitable for regional Techstars programs, while accurate mentor support is AngelPad’s advantage.

Statistically AngelPad gets 4000 applications yearly. Unconfirmed reports state that YC gets 27 000, Techstars — 12 000, 500 Startups — 18 000 applications. 1% of the applicants get into the programs. The above-said accelerators continue invest in start-ups from Russia, Belarus and Ukraine. For example, Scentbird, Veryfi, Chatfuel, Petcube went through the programs, as well as recent joint accelerator of Sberbank and 500 Startups.

It does not always make sense to choose only from this four accelerators. You can look for the other ones which give free participation or do not take any share. Before starting a long journey you can watch Y Combinator, Gmail founders’ and read their main messages in the articles on Forbes website.


Based on: https://www.forbes.ru/tehnologii/373419-gde-sozdat-startap-na-milliard-sravnenie-luchshih-akseleratorov-mira?fbclid=IwAR3Fx-obpFf1RYEa891JxVv-VDTizK47967e0Z26401dClGfxKXmYBI9MXE