Trend 1: Growing ties between accelerators & corporations

Corporate funding

“Corporations are increasingly engaging in a more meaningful way with startup founders and the broader entrepreneurial ecosystem,” said Bobby Franklin, President and CEO of NVCA. The number of venture capital firms (VCs) has grown by 15.5% each year between 2011 and 2015, according to data from CB Insights. This growth in corporate engagement in the startup ecosystem is beginning to spill over into the accelerator industry.

Corporate revenue in 2017

As the accelerator industry matures, we are seeing increased collaboration between accelerators and corporations. “On the one hand, this is because corporations are discovering that accelerators are an efficient and effective way to engage with startups. On the other hand, accelerators understand that corporations can help them fund operations in the short-to-medium term (exits are often far out). They improve the prospects of their portfolio companies that can potentially sell to, raise funds from, or be acquired by these corporations," said Miklos Grof, co-author of this report.

There is a growing trend for corporations to outsource their acceleration programs due to their limited skills in accelerating startups. Some voices in the startup ecosystem, notably high-profile venture capitalist Fred Wilson, welcome this development. He believes, “Corporations should BUY companies. Investing in companies makes no sense,” as cited by CB Insights.

Corporations can benefit from accelerators in 5 different ways:

• Launching a program quickly and cost-effectively: by partnering with accelerators, corporations can quickly enter the acceleration business and adopt best practices developed by accelerators over years of operation.
• Enhancing deal flow: by accessing the accelerator’s immense marketing power and network.
• Staying up to date: by having access to an accelerator’s deal flow, they receive insight into the innovation pipeline in their market. Corporations have learned that competitors now often come from the startup world.
• Building an innovative corporate culture: by placing their corporate executives as mentors in the accelerator or by enabling their own corporate executives to innovate. In the latter case, the new product could be placed into a separate company that is then accelerated by the accelerator.
• Building a more innovative brand: by aligning with accelerators and their startups which have become symbols of innovation in the eyes of the public.

Examples of accelerators that are aligning themselves with corporations include: 33ENTREPRENEURS, Collider, Conector Startup Accelerator, and L Marks.

Trend 2: Verticalization

Are your program(s) focused on specific verticals?

Accelerator verticalization is driven in part by the following:

• Establishing core competence: accelerators have realized that it is hard to attract and choose high potential startups when they are 'jack-of-all-trades'.
• Responding to corporate clients: the expertise of a corporate sponsor or partner is confined to the industry in which it operates.
• Brand building: in order to offer more "concentrated" value to startups and attract the best founders, accelerators need to position themselves in their ecosystems and attract more experienced mentors and investors.

Continuing the trend identified in the 2015 report, the acceleration landscape in the region is increasingly moving towards verticalization, with 62.6% of accelerators running programs focused on a particular industry or sector niche. This trend is likely to continue as regional startup ecosystems continue to mature. This is a very positive development because verticalized accelerators generally bring more value to startups through more qualified acceleration teams, larger pools of quality mentors within the industry, and close corporate ties to related markets.

Some examples of verticalized accelerators in the region include: Startupbootcamp Fintech, Merck Accelerator, Emerge Education, and Next Media Accelerator.

Trend 3: Expansion

Do you plan to expand to new locations in 2017?

After reaching a certain level of maturity, expansion becomes a natural next step for well-established accelerators. This growth comes in three forms: by opening new vertical programs, by launching new programs in different cities, or by launching programs internationally. Some examples include the recent international launch of programs run by European accelerators, such as Startupbootcamp and NUMA in Mexico or Rockstart in Colombia.

According to Sebastien Brunet, co-author of this report, “There are different reasons for which an accelerator decides to go abroad: to help their startup portfolios expand to new markets by providing softlanding services, to source innovative startups from new regions, to increase the quality of their deal flow and to reinforce their brands on an international level.”

International expansion usually happens in two ways:

• By merging or acquiring an already existing accelerator in a new country.
• By partnering with a local player, for example a VC fund.

Trend 4: Blurring lines

Traditionally, the norm for an accelerator was to accelerate 10-30 startups per year by investing $20,000-$50,000 in each business.

Today, accelerators often operate across the investment life cycle in an attempt to fill the gaps in local startup ecosystems and cater to potential financial partners and sponsors. These include governments, universities, and corporations. New operating models have evolved immensly, thereby blurring the lines between accelerators, incubators, and early-stage funds. Of the 193 accelerator programs included in this report, 30% described themselves as a combined accelerator, incubator, venture capital fund, and/or angel group.