Entrepreneurial Ecosystem

The entrepreneurial ecosystem is comprised of a wide array of institutions and resources that contribute to the development of entrepreneurship on a local or municipal level. These components have led to the creation of clusters of entrepreneurial success and growth, such as Silicon Valley (Palo Alto, California) or Route 128 (Massachusetts).

Components of the Ecosystem

Accelerators & Incubators

Accelerators

An accelerator is a “fixed-term, cohort-based program including mentorship and educational components, that culminates in a public pitch event, often referred to as ‘demo-day’” (Cohen and Hochberg, 2014). The mission of an accelerator, often a non-profit entity, is to provide early stage startups with resources, mentorship, and networking needed to gain access to venture capital funding. On average, cohorts stay with an accelerator for 3 months cumulating with a pitch to several venture capital investors. (Fehder and Hochberg, 2014)

Incubators

Incubators “shelter vulnerable nascent businesses, allowing them to be stronger to become independent” (National Business Incubation Association). Incubators serve as a temporary space for start ups to develop in their early stages. Unlike accelerators, there is no formal curriculum, cohorts, or duration of stay. Residents of incubators pay fees for both rent and services, and are not offered the breadth of resources found in an accelerator. (Fehder and Hochberg, 2014)

Top Seed Accelerators, 2014 (SARP)*

1. AngelPad (San Francisco, CA)
2. MuckerLab (Santa Monica, CA)
3. Techstars (Boulder, CO; Boston, MA; Chicago, IL; Seattle, WA; New York, NY; San Antonio, TX)
4. University of Chicago New Venture Challenge (Chicago, IL)
5. Alchemist (Silicon Valley)
6. StartX (Santa Clara, CA)
7. Amplify, LA (Los Angeles, CA)
8. 500 Startups (Mountain View, CA)
9. Capital Innovators (St. Louis, MO)
10. Dreamit (Philadelphia, PA; New York, NY)
11. Surge (Houston, TX)
12. MassChallenge (Boston, MA)
13. The Brandery (Cincinnati, OH)
14. Gener8tor (Milwaukee, WI; Madison, WI)
15. ZeroTo510 (Memphis, TN)
16. AlphaLab (Pittsburgh, PA)
17. Blue Startups (Honolulu, HI)
18. ERA (New York, NY)
19. Betaspring (Providence, RI)
20. The Iron Yard (Greenville, SC)

* Notable absences: Y Combinator and Rock Fund, both of which no longer identify as seed accelerators but as seed funds

Angel Investors

Angel investors are “high-net-worth-individuals that make private investments in startup companies with their own money” (Kerr et al., 2014). Recently, angel investors have been pulling their resources together in what are classified as either angel groups or angel funds. In these groups, combined capital allows a combination of larger investments or a more diversified portfolio of investments.

The Angel Capital Association, a collective of accredited angel investors in the United States, claims over 13,000 member investors and more than 240 accredited angel groups.