Key Takeaways

• Trends in the global business (startup) accelerator space include digitization of processes, the establishment of closed models, and global mentorship.
• Accelerators were forced to digitize their processes due to the COVID-19 pandemic. Processes such as workshops and founder mentoring have been transformed and are being delivered in digital format.
• Examples of organizations that are innovating in the business (startup) accelerator space include Y-Combinator, Plug and Play, and H-Farm.

Introduction

Trends

Digitization of Processes

• Accelerators were forced to digitize their processes due to the COVID-19 pandemic. Processes such as workshops and founder mentoring have been transformed and are being delivered in digital format.
• Additionally, these transformations are driven by "time savings offered to both Founders and program managers by virtual delivery."
• There has also been an increase in online accelerators due to the COVID-19 pandemic.
• Accelerators at the forefront of this trend include Y-Combinator and STARTUP Anywhere in Germany.

Establishment of Closed Models

• According to 1stMover, accelerators are establishing club models with companies to give their programs stable and long-term financiers.
• There is also an increase in the adoption of closed models such as startup studios/venture studios. Startup studios bring together top founders, coaches, and venture capitalists.
• According to Enhance Ventures, there were 560 venture studios in 2020 representing 625% growth when compared with the number of venture studios from 2015 to 2019.
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• Accelerators at the forefront of this trend include GAN Accelerators. GAN operates the "Global Startup Studio Network—a community of startup studios all over the world."

Global Mentorship

• According to Accelerator Software, traditionally, local mentors were frequently used by accelerator programs to train participants. However, the COVID-19 pandemic has changed this, and mentors could communicate with founders practically from anywhere in the world.
• Accelerators such as Y-Combinator and Plug and Play are establishing their presence worldwide. For instance, Y-Combinator's Startup School is fully online and offers its services to over 14,000 start-ups globally.
• Accelerator Software predicts that accelerators will continue to bring in mentors from outside local areas. This will increase the number of prospective specialists that can interact with and assist startup founders.

Innovative Accelerators

Y-Combinator's YC Program

• The YC Program is a 3-month program that aims to help "startups really take off." YC offers 3 months of intensive grooming and mentorship to accepted startups.
• Additionally, YC offers startups a platform called Bookface where they interact with other founders and are able to answer their questions.
• YC has created an innovative model for funding startups. The company invests $500,000 in every startup in two separate contracts, known as safes.
• Safe 1 states that the $125,000 seed investment by YC secures it a 7% ownership share in the firm from the outset. Safe 2 ($375,000) ensures that YC will be a preferred investor when the next round of funding comes up.

Plug and Play

• Plug and Play is a startup accelerator based in Silicon Valley, California. The company leverages its relationships with 500 big business partners and 300 venture capitalists to help startups "land pilots and grow faster."
• Plug and Play have different programs for a variety of businesses and sectors, including real estate, insurance, and fashion. The company also offers an alumni ecosystem and free office space.
• Unlike other accelerators, Plug and Play business model does not require startups to relinquish their ownership.
• Startups in its programs do not necessarily receive an investment after going through these programs. It has a separate venture firm, Plug and Play Ventures that "makes investments and runs startup programs, but doesn’t invest in all the companies that go through those programs." This arrangement brings much value to Plug and Play companies.
• Plug and Play invest " between $25,000 to $500,000 to become a stakeholder" in future funding rounds of a startup company.

H-Farm

• H-Farm conducts industry-specific accelerators with the goal of identifying, supporting, and investing in the most promising entrepreneurs. 
• The company "provides to each startup an all-inclusive investment package of seed investment, room&board, working facilities, acceleration services: mentorship, workshops & seminars, deals from tech partners, business network, Demo Day."
• The company partners with other companies in different industries such as fashion to make it more sustainable and attractive to founders. Its partners are also able to find innovative startups in this arrangement.
• For instance, the company has partnered with TheCurrent for its Global Fashion and Retail Accelerator. It has also partnered with Deutsche Bank for its Internet of Things Accelerator program.

Research Strategy