Changes

|Cohen

|More specifically, accelerator programs are programs of limited-duration—lasting about three months—that help cohorts of startups with the new venture process. They usually provide a small amount of seed capital, plus working space. They also offer a plethora of networking opportunities, with both peer ventures and mentors, who might be successful entrepreneurs, program graduates, venture capitalists, angel investors, or even corporate executives. Finally, most programs end with a grand event, a “demo day” where ventures pitch to a large audience of qualified investors. But accelerators differ in several ways. Accelerators and incubators differ in these four areas. 1. Duration: Perhaps the most fundamental difference is the limited duration of accelerator programs as compared to the continuous nature of incubators and angel investments. This The limited duration of accelerators, usually three months, is the characteristic that most clearly defines accelerator programs. Research on incubators suggests that firms graduate from incubators anywhere from one small difference leads to many five years after they begin. Established timelines and strict graduation dates reduce the amount of codependence between ventures and accelerators and force ventures to face the selection mechanisms that operate in the market (pp. 3). 2. Cohorts: Another byproduct of structured, limited-duration programs is that ventures enter and exit the programs in groups, known as cohorts or batches (pp. 2).; 3. Business Model: Most of the original accelerators are privately owned and take an equity stake in the ventures participating in the programs. Moreover, some accelerator managers are also active angel investors who provide additional financing to some of the ventures, either directly or via a fund. Incubators, on the other differenceshand, are mostly publicly owned, managed by managers, and generally do not have their own investment funds (pp. 2)...for-profit accelerators usually make equity investments in participating firms. Less frequently, accelerators are nonprofit organizations.; 4. Selection: Another byproduct of accelerators’ limited duration is that they accept ventures in batches, usually once or twice a year, while incubators accept and graduate new ventures on an ongoing basis. The batching selection process focuses the accelerator’s marketing and outreach around key dates. Top accelerator programs accept as few as I discuss in more detail belowone percent of applicants (pp. 4).; 5. Education, Mentorship and Network Development: On the other hand, intense mentorship and education are cornerstones of accelerator programs and often a primary reason that ventures participate (pp. 4). The limited duration of accelerator programs is the feature that most clearly defines them. A consequence of this limited duration is that cohorts or batches of firms start and graduate together; this intensely focuses the attention of the founder, mentors, and accelerator directors on the nascent ventures for the duration of the programs. Periodic graduations, marked by demo days where ventures pitch groups of investors, further distinguish accelerator programs from incubators and angel investors (pp. 7).