It is absolutely imperative for a founding team to choose the right early-stage partner, as this will be one of the most important determinants of their ultimate success as an entrepreneur. Unfortunately, most founders will discover that there are generic lists of partners, all of which seem to be simply marketing material (i.e., well-written, with vague promises of "mentorship" and "networking"), with little to no details about the more important factors, like how much equity they take, how much money they provide, and how much time commitment is needed from the founders.
This extremely vague information creates a challenge for founders looking for early-stage capital. If founders have to give up equity, they should have clear expectations of what they will receive in return. Just because a brand name appears on your pitch deck does not guarantee that you will be able to pay your bills or that you will achieve product-market fit.
The Importance of Transparent Investment Data
Founders should receive detailed documentation to support their investment decisions, including the exact amount of funding available through a program; the size of the cohort; the application requirements; and the requirement to relocate full-time to the program's location.
This guide will provide you with the information you will need to make an informed decision about which tech startup accelerator program to apply to. The information contained in this guide is based on actual deal terms, stage requirements, and alumni success stories. If you are comparing programs, you should have access to complete and detailed information regarding what you will receive in exchange for the early-stage capital you receive.
Market Trends & Current Landscape in Tech Accelerators
The early-stage capital market has changed dramatically over the past few years. We have seen a shift away from traditional funding models to more flexible options for founders seeking early-stage funding.
There are now a wide variety of options for founders looking to secure early-stage funding. Many accelerator programs have evolved their models to the pre-traction stage, so you no longer need substantial revenues to be accepted into an accelerator. Additionally, many programs are providing funding and support through the "founder-in-residence" or residency model, which is specifically designed to support teams in the ideation and pre-traction stage.
Almost all of the marquee programs have publicized their funding terms, making them much easier to understand and creating a new standard for transparency across the marketplace. Many investors offer zero-equity options; non-dilutive grants and zero-equity models are gaining traction, particularly in certain industries and geographical areas.
Frictional costs exist: relocation costs, time commitment required weekly, and the pressure of demo days create significant challenges for startups. Founders tend to overlook the frictional costs of startup operations until it becomes too late.
Factors for Choosing a Tech Startup Accelerator
Before starting to build a list of specific accelerator programs, founders must refer to three core criteria to help them filter their list of options. When comparing programs, stage fit is much more important than the reputation of the brand.
Understanding Your Stage Fit
If you want to apply to a growth-stage accelerator as an early-stage startup, it is a waste of time. The startup market can be divided into various stages. An idea-stage accelerator works on the formation of the startup's founding team and the initial validation of the concept through market research.
A pre-seed accelerator typically expects a minimum viable product and validation from a sufficient number of early users. A traction-driven accelerator expects the startup to generate revenue or have an established daily active user base. Founders must match their current stage of growth to the specific entry requirements of the program before submitting an application.
Interpreting Deal, Equity, and Legal Structures
The capital structure for many entrepreneurs and venture capitalists has changing trends. When considering funding options, it is critical for entrepreneurs to understand the dollar amount of the funding, the equity percentage taken, and the legal structure of each funding option.
Most venture capital organizations use a Simple Agreement for Future Equity (SAFE). Some VCs will use a SAFE with no caps and include the possibility of a Most Favored Nation ("MFN") clause.
Entrepreneurs should evaluate whether the deal structure will provide dilutive funding or nondilutive capital. By giving away 7% to 10% of the startup’s equity for a small amount of cash, entrepreneurs will create challenges for themselves in the next round of financing if the startup's valuation is not favorable.
Evaluating Network and Signal Quality
A strong network will create opportunities to connect founders with potential investors and/or early customers. It is not enough to simply compile a list of email addresses; there must also be some form of ongoing support provided to the companies receiving seed funding from these types of networks.
The best sorts of programs, which provide follow-on funding, will offer a final structured "Demo Day" as well as introductions to currently active VCs.
In this evaluation of the Top 20 Accelerators for tech startups, I provide what I believe to be a definitive list based on concrete metrics such as: total number of companies supported, total amount of funding provided per company, and the clear stage focus of each of the programs evaluated.
1. Y Combinator
Y Combinator is the biggest name in start-up accelerators. The influence of the Y Combinator network and its ability to signal "success" is huge. Its alumni network has over $300 billion in combined valuations from over 2,830 alumni. Of these alumni, 125 startups are valued at more than $150 million and 25 startups have valuations greater than $1 billion.
Y Combinator's standard deal has become publicly and readily available. It is $500,000 total, which breaks down as follows: $125,000 for 7% of the company and $375,000 in the form of an MFN SAFE ($375,000 for an uncapped MFN).
This is a significant change from historical Y Combinator deals. Historically, the deal would have given a company $120,000 for 7% and previously $20,000 for 6%. The new deal structure is creating an expectation of greater transparency in the startup accelerator industry.
2. Techstars
Techstars is a global program that has a strong local presence in many markets. They currently have a portfolio of over 1,000 businesses and claim a total market value of $8.1 billion across their entire network.
Most historical accounts from founders indicate that when they entered into their original agreement with Techstars, the total investment from Techstars was $118,000 in return for 7% to 10% of the company’s equity. Updates to their investment terms were publicly announced in 2019.
Techstars also places a significant emphasis on being highly mentor-driven and provides a rigidly defined structure of three months for each startup, culminating in what many founders consider to be a very high-stress demo day event.
3. MassChallenge
MassChallenge is unique because it does not require any ownership stake in the startups that participate and, therefore, enables founders to receive support without losing any portion of their early-stage equity. For those founders looking for non-dilutive support and willing to participate in a larger cohort-style model, MassChallenge would be a good choice.
When reviewing the numbers associated with MassChallenge, it becomes clear that the organization has an enormous impact on helping entrepreneurs with building their businesses, as noted by the accelerated creation of 136,000 jobs, over $2.7 billion in total revenue generated, and over $5 billion in total funding raised; however, some sources also cite numbers that exceed these statistics.
An additional source of data claims their total number of startups accelerated is 6,000 and their total funding raised exceeds $16 billion.
4. 500 Global
500 Global is one of the largest and best-known generalist venture capital funds and acceleration programs with its geographical reach covering virtually every significant geographic region in the world and its strong connections with early-stage entrepreneur-focused organizations. Many people cite 500 Global as one of the top three most commercially relevant organizations for early-stage founders.
500 Global provides each new startup with a fixed dollar amount investment in return for a percentage ownership of the new startup, and they are heavily focused on marketing the new startup and helping them rapidly acquire new customers to grow the new business.
500 Global's broad geographical footprint makes it an attractive option for early-stage founders who want to quickly expand their business operations internationally.
5. Plug and Play
Plug and Play is unique compared to most other venture capital firms and acceleration programs; they actively seek to connect early-stage startups with large corporate partners in order to leverage their business resources.
The overwhelming majority of the startups currently being mentored by Plug and Play are active in the B2B technology and enterprise solution markets.
6. Antler
Antler is at the forefront of the new approach to building startups — earlier intervention. Their residency model is aimed at day-zero founders, with applications available for those without a team or a finalised business idea.
Antler helps exceptional individuals with validating their ideas and building an early product; finding technical co-founders; then, once the team is formed and the idea is validated, Antler invests pre-seed capital to help launch the new business.
This is an excellent way for solo founders to build a founding team with a structured environment.
7. Entrepreneur First
Like Antler, Entrepreneur First is very focused on the pre-team and pre-product stage of startup building. Their model is to invest in talent first and gather high-quality individuals with both technical and commercial skills together under pressure to build teams.
The results speak for themselves; Entrepreneur First has built more than 100 startups that have a combined value of over $1 billion.
Their method is rigorous, with a cohort-based model that forces founders to form teams quickly or leave the programme.
8. Startup Wise Guys
Startup Wise Guys is a key player in Europe, focusing primarily on B2B SaaS, fintech, and cybersecurity startups. Since its inception, they have accelerated more than 145 startups, establishing a network of more than 200 mentors.
In addition to their focus on sales execution and entering the European market, Startup Wise Guys has a very active partner ecosystem, working closely with companies like Facebook, Google, Microsoft, IBM, and others.
9. Alchemist Accelerator
The program of Alchemist Accelerator is designed specifically for enterprises that are creating products to sell exclusively to large corporations as opposed to individual consumers. If you’re trying to reach businesses instead of consumers, Alchemist is generally regarded as one of the "best" programs that can help you succeed.
Alchemist focuses on enterprise sales methods and practices long sales cycles along with pricing strategies to achieve maximum effectiveness in growing businesses that have long sales cycles.
Alchemist has a very rigorous selection process and is geared towards entrepreneurs who will benefit from having high-level introductions to corporate decision-makers rather than just getting advice on consumer marketing.
10. SOSV
SOSV is a global, venture capital firm that manages several deep-tech and hardware incubators. They are not a generalist incubator but are for climate-focused finance and sustainable finance companies (hard science-based): they fund hard science, biological science, and physical product development.
SOSV uses a cohort-based model supported by large-scale lab space and manufacturing capabilities. If you’re creating software type products, you would probably want to look at another incubator for support.
However, if you are developing an actual physical product that requires prototyping, SOSV has established the absolute best infrastructure and resources to assist you in getting to that point.
11. HAX
HAX is the SOSV hardware incubator and is focused on helping keep hardware companies alive. Building/creating hardware is difficult to find financing for and to develop successfully; however, HAX provides the financial resources and supply chains to provide you with everything you need to successfully launch a hardware company.
To date, HAX has accelerated and produced more than 200 hardware companies, which have all sold over 147 products into the mainstream market.
HAX helps entrepreneurs and startups identify suitable OEM parts, create prototype designs, and build and maintain direct relationships with their manufacturing partners, thereby drastically changing the amount of time it takes for a physical product to go from concept to market.
12. IndieBio
IndieBio is the SOSV life science arm and focuses on funding new biopharmaceutical, synthetic biology, and health technology companies.
While early funders and lab space access are essential for starting companies, the expenses associated with laboratory services are a critical early issue for entrepreneurs in the life sciences. Through IndieBio, this barrier has been removed.
Thus, founders can put all of their attention and energy toward validating their scientific concept/technology and establishing their beginnings for clinical approval.
13. Founder Institute
Founder Institute is a global organisation that provides opportunity for entrepreneurs to validate their ideas, regardless of where they are geographically based. The Founder Institute is focused on ideation only.
You don’t need to leave your job immediately; it has a framework to enable part-time participation for the validation of idea(s).
The platform helps entrepreneurs prepare for eventual full-time entrepreneurial status and entrepreneurship with venture capital support, and therefore, is a perfect resource for getting started with studying the fundamentals of entrepreneurship.
14. Seedcamp
Seedcamp is considered the European seed capital gatekeeper. Seedcamp is still developing its model but continues to support many of the same functions of an elite accelerator.
Seedcamp provides entrepreneurs with early-stage capital and immense opportunity through relationships within the European venture capital space.
Technical founders in Europe view Seedcamp as an excellent resource in their readiness for follow-on investment from top-tier London or US-based funds (Series A).
15. AppWorks
AppWorks is a leading player in Greater Southeast Asia. The size of their regional influence in Southeast Asia is enormous, enabling them to provide unique and detailed data.
From 2017, AppWorks has invested in 351 startups and 1,044 founders. The AppWorks ecosystem generates over $2.86 billion in annual revenue, employs 10,115, and has a combined valuation of $3.97 billion.
For those targeting the Southeast Asian market, it will be very difficult to replicate their local networks and alliances.
16. StartUp Health
StartUp Health is focused solely on the health tech sector, which has unique regulatory and partnership challenges that generalist programs do not comprehend as they relate to building a health tech company.
They take a long-term view of supporting founders. Since 2012, they've supported over 200 companies, completed 12 successful M&A transactions, and had over $800 million generated in funding.
17. APX
APX operates in Europe and can offer you a rapid and simple deal. The deal includes $50,000 for 5% equity.
Their program lasts exactly 100 days. The purpose of the program is to provide concentrated effort on European early-stage teams (e.g., startups) and prepare them for their larger seed round. The simplicity of their terms is appealing to early teams.
18. Startupbootcamp
Startupbootcamp runs global industry-specific programs in various regions. Each region's program terms are based on local/regional factors. However, Startupbootcamp has also developed a highly structured approach to assist regional entrepreneurs in the execution/functionality of their ideas.
For example, in the Europe and Cape Town program, they provide €15,000 in cash and €450,000 in sponsorship/service, and they guarantee pitch access to more than 400 investors on their demo day (as well as numerous other opportunities).
19. Union Kitchen
Union Kitchen has proven to be very successful and highly specialized in the food and consumer products sector in a very tough industry. They have launched five hundred products in total.
They have helped their founders raise twenty million dollars in revenue combined; and they have created more than one thousand jobs for people.
20. TandemLaunch
TandemLaunch is a Canadian-based company that concentrates on creating deep technology businesses using spin-offs from universities.
Their unique funding strategy includes providing as much as eight hundred thousand dollars of seed capital for the right projects.
As well as giving seed capital, they connect technical inventors with commercial co-founders to develop deep technology businesses with strong intellectual property protection from the outset.
Making Your Final Accelerator Decision
Ultimately, when deciding upon which growth partner to choose, do NOT submit an application for any program solely because you recognize the name. Instead, you should run the math on the deal terms to determine what the real cost of your time is.
For pre-traction founders seeking co-founders, residency models such as Antler or Entrepreneur First are your best options. Founders who have already achieved early traction and want to maximize their valuation leverage should consider using the standardization of terms offered through an uncapped SAFE agreement similar to what Y Combinator has developed.
Founders wanting to develop a physical product should look for specialized environments, such as HAX or IndieBio, as generalised advice will not be useful.
Always review the terms closely before signing anything. To relocate your company, provide your entire team with a weekly full-time schedule, and then prepare for the enormous pressure of your first demo day, you must understand that these are all large operational expenses that you should consider prior to giving up equity in your company.
You need to fully evaluate the benefit of the funding, network, and stage of your company at this time in order to determine whether or not giving up a portion of your equity is a wise decision.
Startup Accelerator for Tech Companies FAQs
How can the residency model change the speed of your early operation?
The residency model increases the speed of operation by minimizing outside distractions and creating an environment where a number of very talented entrepreneurs are concentrated together in order to maximize the opportunity for startup formation.
When everyone in the facility is actively seeking co-founders or new business ideas, it will take weeks (rather than months) to build your company with your team.
Due to the requirement of speed, there is a high risk of founder burnout in this type of residency model, and founders must be willing to change their ideas on a daily basis based on constant, timely feedback provided by the directors of the residency programme.
Does being in a remote cohort create a loss of access to the network for technical entrepreneurs?
There is a good chance that entrepreneurs who rely on informal, spontaneous interactions to build professional relationships with other professionals in their marketplace will be adversely affected when they are in a remote cohort because they do not have the same access to informal, "water cooler" conversations and the resulting relationship development that occur in an in-person environment.
As an example, if a technical entrepreneur needs to grab coffee with a peer whose primary role is sales, they can easily set up a meeting and sit down, discuss, and resolve a problem in about 15 minutes.
In a remote cohort model, however, the only time that technical and sales-oriented entrepreneurs have the opportunity to talk to each other is during scheduled video calls. As a result, the natural flow of information will be adversely affected in most cases.
Because of this, technical entrepreneurs who are in a remote cohort need to be highly aggressive about scheduling one-on-one digital meetings with their peers; otherwise, they run the risk of losing out on the most substantial value of their networks.
At what point does equity dilution from an uncapped SAFE (Simple Agreement for Future Equity) outweigh the value of the SAFE?
Uncapped SAFEs, such as the $375,000 MFN (Most Favored Nation) component of the standard Y Combinator (YC) deal, are extremely beneficial at the raw idea stage of a company; they provide immediate capital without having to negotiate an early valuation that ultimately is unlikely to hold true.
In contrast, however, if your company is at the stage where it generates $20,000 monthly recurring revenue (MRR) or has a developed product (DPP), an uncapped SAFE can prove to be a very risky financial investment.
This is because when you raise your next equity funding round, your initial SAFE will become equity at a discount to the market price; therefore, when this occurs, the potential dilution for you and your co-founders will be extremely large and unexpected. Consequently, before you sign an uncapped SAFE, you should model (design) your equity cap table for two future funding rounds.