What is a startup accelerator?

January 15, 2023

Understanding the Role of Startup Accelerators in Entrepreneurship

There are two types of accelerators: accelerators for startups and for existing entrepreneurs. The most popular is the startup accelerator. There are over 200 startup accelerator programs in the United States and many more globally, and they differ in approach, focus, cost, and effectiveness. The well-respected Y Combinator and Techstars, are investor funded and work primarily with tech startups. Others are sponsored by universities, in the case of Stanford University's StartX, or by corporations, especially in the healthcare sector. Private startup accelerators can provide funding, which helps cover early-stage business expenses as well as travel and living expenses for the three-month residency at in-person accelerators. However, the funds and guidance come at a price. Just like any other equity funding, signing an accelerator agreement typically means giving up a slice of your company. Startup accelerators generally take 5% to 10% of your equity in exchange for training and a relatively small amount of funding.

Key Organizations in the Startup Accelerator Ecosystem

Notable organizations in the startup accelerator ecosystem include Y Combinator, which has launched over 2,000 companies including Dropbox and Airbnb. Techstars, another significant accelerator, operates globally and offers extensive mentorship and networking opportunities. StartX by Stanford University focuses on accelerating the growth of Stanford-affiliated startups. These organizations provide vital resources, mentorship, and funding to help startups scale rapidly. The Center for Entrepreneurship also implements two types of programs. The ScaleUp accelerator is for existing entrepreneurs who are willing to grow their businesses, while the Startup Club program is designed for new startups.