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Over the last ten years, startup accelerators have continued to spread all around the world as a new form of supporting tech entrepreneurs and startups. This model was born in 2005 with the launch of YCombinator, followed by Techstars in 2006. Its origins lie with early incubator models, however, they have a completely different business model and use a lean startup approach. We used in this report the definition given by Miller and Bound (2011), who distinguish accelerators from incubators by five features:
1) An application process that is open to all, yet highly competitive.
2) Provision of pre-seed investment, usually in exchange for equity.
3) A focus on small teams not individual founders.
4) Time-limited support comprising programmed events and intensive mentoring.
5) Cohorts or ‘classes’ of startups rather than individual companies.
The objective of this report is to understand how the accelerator industry developed in Europe and how they contribute to the european startup ecosystem.
76 accelerators responded to the survey out of 128 accelerators contacted from all over Europe. 41% of the contacted accelerators decided not to respond to the survey because of privacy concerns and/or inactivity last year. We included corporation-backed, government-funded and vertical accelerators, as well as U.S. accelerators with operations in Europe.
Seedcamp was the first accelerator founded in Europe, in 2007, by a group of 30 entrepreneurs. Many others were created the following years, including Tetuan Valley (2009), Startupbootcamp (2010), Le Camping (2011), all with similar, yet different structures and business models.
This surge in the number of accelerators is mainly due to advances in digital technology, which importantly decreased costs of starting a business. As more and more startups were created each year, developing effective ways of incubating and supporting them became more relevant than ever. At the same time, the decrease in startup costs has created the opportunity to invest much smaller amounts of money than previously.
There are two important elements to the funding structure of an accelerator: the funding of the accelerator itself, and the funding available to startups. The following graph illustrates the source of funding provided to the startups that participated in different acceleration programs in Europe in 2014.
We found out that most accelerators followed the traditional model set up by YCombinator of offering a small amount of funding in exchange for equity (typically around 5-10%). These accelerators are most of the time funded with private capital (from angel investors, private investment funds) and aim to generate revenue from follow-on investments in the startup they support and startup exits.
We can also include corporate accelerators, which are similarly backed by private capital, but their aim is directed towards generating innovation that they can provide to their customers and stakeholders.
100% publicly funded accelerators have a different objective, which is to boost entrepreneurship and stimulate startup initiatives, either in a given region, industry or technological area and create an ecosystem within them. The FIWARE Accelerator program, composed by 16 accelerators backed by the European commission, is a perfect example.
This ranking is based on the number of startups accelerated in 2014. It is important to highlight the fact that not all accelerators invest money in the startups that enter their programs.
Accelerator with investment in cash
% of accelerators that said that they intend to invest
in this market in the next 12 months
There are around 100 startup accelerators in Europe and this number will keep growing in the near future. Accelerators, despite their business model being relatively young in Europe, seem to have established themselves as an attractive first investor for many early-stage startups. However, due to the lack of data, it is still difficult to realize an in-depth analysis and measure the real impact these accelerators have on the different ecosystems in Europe.
*The survey above was compiled using information reported by the incubators/accelerators
and was not verified or audited by Fundacity or any other third party.
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