Defining Seed Accelerators

Accelerating Success
A Study of Seed Accelerators and
Their Defining Characteristics

May 15th, 2012 - Gothenburg, Sweden

Accelerating Success - Intro - acceleratorstudy.com

Dropbox - an Accelerated Success
• Participated in Y Combinator in 2007
• Now valued at over $5 billion


Outline of Presentation
• Background to thesis and accelerators
• Research question
• Method and research design
• Case studies of accelerators
• Findings from research
– Stakeholder Perspective
– Organization Perspective
– Process Perspective
• Conclusion


Why Study Accelerators?
• Explore a new phenomena – little has been
written about accelerators
• Chalmers Innovation, our stakeholder,
interested in the accelerator model

Accelerating Success - Background - acceleratorstudy.com

Chalmers Innovation
• A business incubator and seed fund in
Gothenburg, started in 1999
• Picking up new trends from Silicon Valley,
Lean Startup and accelerators
• Startup Spring Camp 2012
• Interest in further developing their activities
related to early-stage software startups


Software Startups in the Past
• Boo.com – an internet clothing retailer
• Burnt over $125 million of venture capital
in 18 months
• 8 offices and over 400 employees
• Launched in 18 countries simultaneously
in November 1999, bankrupt in May 2000


Incubators
– the Predecessor of Accelerators
• First incubator established in 1959
• Provides basic necessities for operating,
such as office space and administrative aid
• In some cases also provides access to
advisors and investors


New Methodologies

Customer Development Lean Startup


Decreasing Costs for Starting New
Ventures
• Cloud services enable instant scalability
• Open source software provides cheap
ready-made solutions
• The huge venture capital investments not
necessary at the early stage anymore


The First Accelerator: Y Combinator

• Founded in 2005 in Silicon Valley
• Today over 200 different accelerators world-
wide


Characteristics of an Accelerator from
Startup Factories
• An application process that is open yet highly
competitive.
• Provision of pre-seed investment, usually in
exchange for equity.
• A focus on small teams not individuals.
• Time-limited support comprising programmed
events and intensive mentoring.
• Startups supported in cohort batches or
‘classes’.

Research Question

What defines a seed accelerator and which
aspects are useful for Chalmers Innovation?

Accelerating Success - Research Question - acceleratorstudy.com

Method Used for Thesis
• Roadmap created using secondary
information from articles and blogs
• Built theory from case studies on
accelerators in Europe and the US
• Collected material was used to form the
analysis consisting of three perspectives

Accelerating Success - Method - acceleratorstudy.com

Iterative Method Used

Accelerating Success - Method - acceleratorstudy.com

Case Studies of Accelerators
• American: Y Combinator and TechStars, data
collected from secondary sources
• European: The German Silicon Valley
Accelerator, Springboard, Startupbootcamp,
Nordic Startups, betaFACTORY and Startup
Sauna, data collected from interviews

Accelerating Success - Case Studies - acceleratorstudy.com

Y Combinator and TechStars
• Two of the first accelerators, now defining the
standard of an accelerator

Founded in 2005 Founded in 2007
Mountain View, California (Silicon Boulder, Colorado
Valley) 6% equity
2-10% equity 6 000-18 000 USD funding
11 000 – 20 000 USD funding 9-12 teams in each batch
65 teams in last batch


European Accelerators

Founded in 2012 Founded in 2009 Founded in 2010
Berlin, Germany Cambridge, UK Copenhagen, Denmark
No equity 6% equity 8% equity
No seed funding £5 000 - £15 000 funding 15 000 € funding
6 teams in each batch 10 teams in each batch 10 teams in each batch

Founded in 2011 Founded in 2011 Founded in 2010
Stockholm, Sweden Oslo, Norway Helsinki, Finland
Not operational 6-8% equity No equity
5000 – 15 000 € funding 1500 € funding
5 teams in first batch 15 teams in each batch


Analysis of Accelerators
• The collected data was analyzed and common
themes in the accelerators was triangulated
• These were summed up in three perspectives
– Stakeholder
– Organizational
– Process

Accelerating Success - Analysis - acceleratorstudy.com

Stakeholder Perspective
• Startups: contact with mentors and investors, quality
assurance
• Investors: due diligence, deal flow
• Mentors: pay-it-forward, keeping up-to-date, meet
with interesting people
• Society: innovative environment, job creation


Stakeholder Pyramid


Organizational Perspective
• Few employees in the organization
• Mentors work for free
• Business model differs, often equity-based
with private investors but sometimes
government or universities


Process Perspective


Conclusion Reached in Thesis
• An accelerator act as a hub, connecting the three main
stakeholders: mentors, investors and startups.
• The accelerator organization consists of a few employees that run
the day-to-day operations and facilitate the interaction between
the stakeholders. Mentors do not receive monetary compensation
from the accelerator.
• The processes in an accelerator can be divided into five distinct
phases; awareness, application, program, Demo day and post
Demo day.
• The accelerator accept teams based on the composition of the
teams rather than their idea.
• The teams in an accelerator are small consisting of two or three
people and the team is at an early stage that require intensive
mentoring and iteration of their idea.
• An accelerator can be seen as a service provided to investors

Accelerating Success - Conclusion - acceleratorstudy.com

Thank you!

Download a copy at
www.acceleratorstudy.com

Accelerating Success - The End - acceleratorstudy.com

Defining Seed Accelerators

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