Accelerator Definition Based on a Review of Definitions in the Literature

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Accelerator Definitions in the Literature

Institution Publication Year Definition URL Key Characteristics
Cohen 2013 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. 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 to 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 hand, 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 one 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). Link TBD
Dempwolf et al. & Small Business Association 2014 Link TBD
Fishback et al. 2007 ...accelerators are organizations offering a suite of professional services,

mentoring, and office space in a competitive program format.

Link TBD
Atkins 2011 Clients: Web-based, mobile apps, social networking, gaming, cloud-based, software, etc.; firms that do not require significant immediate investment or proof of concept; primarily youthful, often male technology enthusiasts, gamers, and hackers. Selection Process: Competitive selection of firms from wide regions or even nationally (or globally). Terms of Assistance: Generally 1- to 3-month boot camps. Services: “Fast-test” validation of ideas; opportunities to create a functioning beta and find initial customers; linkage of entrepreneurs to business consulting and experienced entrepreneurs in the Web or mobile apps space; assistance in

preparing pitches to try to obtain follow-up investment.

Link TBD
Hoffman and Radojevich-Kelley 2012 They are for-profit organizations that receive equity in exchange for the provision of funding to the startups. They do not necessarily provide office space for the startups they support, but typically provide meeting space. They target regional, national, or even global startups. Link TBD
UK Department for Business, Energy, and Industrial Strategy 2017 Link TBD
Telefonica & O2 2014 Duration: Accelerators typically offer intensive support over a limited timeframe, with a fixed number of intakes per year. Investment: Many accelerators offer pre-seed funding to startups in return for equity. Fees: The majority of accelerators invest for equity rather than charging a fee upfront; some do charge programme

fees but increase their investment to cover the amount. Workspace: Accelerators put greater emphasis on training and mentorship, offering workspace for limited periods. (pp. 9)

Link TBD
Nest - Business incubators and accelerators: the national picture (UK) 2018 Accelerator - Fixed duration programme (usually between three and twelve months); Typically growth-based (payment via equity rather than fees); Focus on services over physical space; Admission in cohorts; Provision of startup services (e.g. mentorship, entrepreneurial training); Highly selective. Link TBD
Nest 2011 An application process that is open to all, yet highly competitive. Provision of pre-seed investment, usually in exchange for equity. A focus on small teams, not individual founders. Time-limited support comprising programmed events and intensive mentoring. Cohorts or ‘classes’ of start-ups rather than individual companies. Link 1; Link 2 TBD

CohenIncubatorvsAccelerator.PNG Table2.PNG Source: Excepts from Atkins, D. 2011. What are the new seed or venture accelerators? Available at Link.

PP. 2 Differences Between an Incubator and an Accelerator

Next Steps

-To review: Incubator & Accelerator Article and continue my GoogleScholar Search.