These Are the Best Startup Accelerators in the U.S.
Startup accelerators can too easily be black boxes. There are close to 200 of them, and they all make similar claims: That you’ll emerge from their programs smarter about business, better-connected, and better able to raise financing. Your company, meanwhile, will make progress at a speed just not possible anywhere else.
So how do you choose between them?
The recently released Seed Accelerator Rankings, compiled by a team of professors from Rice University, University of Richmond, and Massachusetts Institute of Technology, are a good place to start. In October, the researchers contacted about 180 accelerators, asking them about the state of their portfolio companies, all of their funding rounds, valuations, and exit information.
They asked graduates of accelerator programs to fill out surveys about their experiences, including questions about valuations, exits, and their general satisfaction with the program. “We get a lot of very honest feedback,” says Yael Hochberg, an entrepreneurship and finance professor at Rice University’s Jones Graduate School of Business and managing director of the rankings.
One thing Hochberg and her team are not looking for: incubators. While the terms “acclerator” and “incubator” are often thrown around interchangeably, to Hochberg and her team, they mean very different things. Accelerators accept companies in distinct cohorts, for a finite period of time. “It’s a bootcamp type program where everyone works very intensively over a period of time,” she says. “With accelerators, companies either die quickly or take off quickly.”
She looks at incubators as co-working spaces with services. “We know what those look like,” she says. “On average, startups stay there for four years and don’t grow much.”
This year, the researchers did not assign the accelerators numerical rankings, as they have in the past. Hochbergs said that’s because the accelerators’ scores tended to be in specific clusters, making it very hard to make a clear call between, say, number eight and number nine. “I’m not going to declare one program i better than another without statistical significance,” says Hocherg. “I’m not going to declare a ranking based on a third decimal point.”
Instead, the team grouped accelerators into tiers. Here are the nine accelerators, listed in alphabetical order, in the highest tier:
500 Startups, which runs four-month programs in Mountain View, Calif., and San Francisco.
Alchemist, a San Francisco-based specialized incubator for enterprise startups.
Amplify.LA, an incubator for tech startups and based in Los Angeles.
AngelPad accepts startups–mostly tech, and mostly b2b–for residencies in both New York and San Francisco
Chicago New Venture Challenge has separate tracks for businesses looking to make a social impact, global businesses, and businesses started by University of Chicago students.
MuckerLab accepts companies to its Los Angeles-based program for anywhere from three to 18 months
StartX is an incubator for Stanford founders in any industry.
Techstars runs 20 accelerator programs in cities from Atlanta to Cape Town to New York. Some of its programs have an industry focus, such as healthcare, media, retail, or cloud computing.
Y Combinator brings a large number of companies–in its last class, 107–to Silicon Valley for three months of intensive development.
Hochberg has some other advice for entrepreneurs looking at incubator programs. Outside of the very best accelerators, she says, you might be better off with an industry-specific accelerator if there’s one that is a good fit for you. “The very top programs can almost always bring in someone in your industry,” she says. The middle-of-the-pack ones might not be able to.
And she notes that accelerators are changing their own business models. The “virtual accelerator” is one variation, but Hochberg is not a fan. “We don’t see that these work, and the programs we see don’t wind up in the top of the rankings,” she says. “The things that have the most effect are the mentoring and the cohort nature of the program, having startups in one place going through the program at the same time together. The breadth and depth of mentoring really matters. You don’t get that in a virtual program.”
The financial model is changing, too. Just five years ago, she says, just about every accelerator took the same size stake in its companies and offered the same amount of cash. That has completely changed. This year, on average, the accelerators gave their companies $39,470 for 5.5 percent of equity. But some offer up to $175,000, and some don’t take any equity at all.
Accelerators are learning that long-term, they can’t live off of 5.5 percent stakes in their companies. That’s leading to consolidation, says Hochberg, and programs like TechStars where a variety of backers get together under one model. Others are adding venture funds to make follow-on investments. Says Hochberg: “That’s the only way you’re going to have a meaningful stake by the time the company exits.”