The Startup Mixelerator


The Mixelerator

This is my term for some of the more recent batch of startup accelerators that has been popping up. With the hundreds of facilities, organizations and communities that are clamoring to support budding entrepreneurs and their various startups, the need to differentiate has become ever more important.

With over 75 startup incubators and accelerators in New York City and its surrounding metro area alone (and another 60 plus co-working spaces), it is easy to get lost in the crowd.

Backing up a bit though—what do I mean by an accelerator? The modern incarnation of the classic startup accelerator emerged during the mid-2000s with the launch of Paul Graham’s Y Combinator in 2005, based out of Cambridge, Mass., then followed closely by the Techstars in 2006 and Seedcamp in 2007.

The idea was, by giving promising founding teams a small bit of capital, a network of experienced mentors, an intense program of “startup” education and other resources, startups could have better outcomes and grow into successful companies. In exchange, the startups would give up a small bit of equity. 

Since then, there has been an explosion of interest in tech startups and entrepreneurship. With the rise in the numbers of startups, many of which are quite credible, those first three programs have expanded and become much more competitive, which has opened up the market to many other similar programs around the country and around the world started by former entrepreneurs, investors, corporations and even governments. If they had access to a network and investors and a prime bit of real estate, then opening up an accelerator was not all that difficult.

The problem is the value proposition for many of these programs is pretty shaky. What startups need most is funding, customers and, to a lesser extent, a network that can add some valuable expertise or useful connections. For some programs, these have been lacking, and, thus, several accelerators have folded.

Another challenge is newer accelerators have struggled to attract top-notch startups. Given the outsized attention and success of Y Combinator, Techstars and a handful of other top accelerators, it is no surprise those are the programs that snag the most promising startups. But perhaps a more salient point is many founders are realizing the classic accelerator model does not work for them.

That is where the “mixelerator” comes in. They are following a different path by mixing up the equity, mentorship and network combination. Some are taking no equity. Some eschew direct funding. Some act more as business connectors. Some are adding value outside of mentorships or traditional programming. Yet others are leveraging alternative sources for networks, plugging into schools’ affiliations, corporate networks or industry associations. And many of these newer accelerators are focusing on a specific niche market, whether industry, business model, product focus or company stage.

In NYC alone, of the accelerators I know of, only a handful are of the generic tech startup variety like the successful ER Accelerator program.

Most are focused on verticals such as financial service like ValueStream Labs or healthcare like Blueprint Health. Some deem themselves a post-accelerator, such as Work-Bench, which leverages its relationship with the print giant RR Donnelley to help enterprise startups that are in a later stage of growth.

Brand new ones are not even taking equity up front, such as Grand Central Tech, which is using its deep relationships with NYC area high schools and colleges to connect startups with a growing base of local talent. Then there are the many accelerators that are not even focused purely on software or even tech, like the R/GA Connected Devices Accelerator, which is focused on the Internet of Things.

It is inevitable the trend should evolve into more specialization and more adventurous experimentation with different models. Even with the increasing number of startups, it could be argued that places rich with accelerators, like San Francisco and NYC, are already at capacity with the current crop of generic programs.

The goal then is not to sweeten the pot with more funding upfront or bigger rosters of mentors or cooler locations (though an accelerator in Maui might be pretty awesome). Already most founders are getting wise to the “equity for access” game that, in many cases, turns out to not be such a great deal. What is clear about the future of accelerators, though, is there are going to be even more; they are going to be even more specialized, and the models themselves are going to likely change. 

This article was originally published on Strong Opinions, a blog by Birch Ventures for the NYC tech startup community.

Image credit: CC by Dinner Series

About the author: Mark Birch

Mark is an early stage technology investor and entrepreneur based in NYC. Through Birch Ventures, he works with a portfolio of early stage B2B SaaS technology startups providing both capital and guidance in the areas of marketing, sales, strategic planning and funding.

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