Each year, GAN asks the accelerators in our community hundreds of questions on their programs with one goal in mind—to gather concrete insights into the state of the accelerator industry as it stands in any particular year. Responses from our yearly survey culminate in a giant data report available to any accelerator from the community that provided us with their data.
Even though accelerators are the primary audience for our report, this data is still incredibly relevant for several audiences:
- Startups that want to know not only what to expect when getting into a program, but what results they’re likely to see once they’ve graduated.
- Investors that want to understand how accelerators support startups all over the world, primarily to know whether accelerated startups make for some of the best investment opportunities and specifics on where they might find those opportunities.
- Mentors that want to know how other mentors are involved at programs, what type of help they can offer, and how accelerators are utilizing mentor support.
- And, corporate partners that want to know whether startups coming out of accelerators are prepared to work with corporate innovation teams—especially in particular verticals related to their work.
And, though we produce a portion of the report—the year’s most interesting insights—for the public to view, I wanted to share some additional insights from data we saw in the full report in 2019. (Note that all data is based on reporting at the conclusion of 2018.)
The Year in Review
Applying to Accelerators in 2019
On average, accelerators receive 594 applications for just 9.6 positions in each cohort, which means it continues to be difficult to get into an accelerator program (only 3.8% of applicants are accepted, to be exact). Most accelerators continue to have defined application deadlines, rather than rolling admissions. For a while, we noticed more and more programs shifting to a “rolling” model, but—this year, only about 8% of accelerators allow startups to be accepted anytime throughout the year.
Who’s Getting Accepted into Accelerators in 2019
Accelerators are still primarily “agnostic.” Meaning, it doesn’t really matter what vertical your company is in, as long as you’re compelling to the program where you’re applying. Still, data and analytics, AI, financial services (FinTech), and AR/VR companies are the most highly sought-after verticals. Nearly half of all programs also reported looking for later-stage companies than they had in the past. Here’s an interesting fact, too: 60% of all companies accepted into accelerator programs come from within 100 miles / 160 kilometers from those programs.
Two interesting insights into what gives a startup a leg-up when applying?
- Seventy percent of accepted startups already have a prototype in place. That’s no surprise, since having a prototype means that accelerators can see and feel a product before they know whether to bet on you.
- And, also no surprise, the large majority of accepted startups already have some customers, even if those customers aren’t yet paying.
Accelerator Terms in 2019
On average, accelerators give $38,000 in return for a 7.3% stake in a startup’s company. Most of the time (62% to be exact), that “stake” is an equity stake in a startup’s company—so you’re giving up 7.3% of your stock to an accelerator for going through their program. But, we’re also seeing programs offer alternative methods of funding like convertible notes and SAFEs, either in addition to equity or in replace of it. When an accelerator offers a note, the amount given usually increases, on average, to $85K with a $3.2M cap, and when a SAFE is offered, it’s typically $50K with a $2.5M cap.
Program Details and Mentors in 2019
Each cohort typically lasts around 16 weeks, on average, or just under four months. During that time, founders have access to around 167 mentors—the average amount of mentors involved at each program. Eighty-one percent of the time, those mentors are local to the program, so they can easily pop over to help startups in need of support. Most mentors either spend a short amount of time (either just one day) or much longer (more than a month) actively involved in mentoring startups. That means, if you’re a startup, you can either expect a rockstar, one-day mentor or mentors that will be with you throughout the program. Oh, and, you’re going to want to thank the mentors you meet. Almost none of them get paid for their time. They’re doing it simply because they want to help the next wave of startups launch their companies.
In addition to mentorship, most accelerators offer legal, marketing, and accounting support of some kind. Other available resources continue to grow, too. Many programs now offer things like design, software development, prototyping, mental health support, leadership coaching, and talent recruitment services. Needless to say, especially as you’re considering applying to a program, it’s important to ask what a program offers to make sure you’ll get access to exactly what you need and so that your expectations are in line with what a program promises.
In terms of staff, accelerators employ around six team members to run each program. This means that, as a startup, you’re not only getting help from mentors; you’re also getting help from a pretty large team whose sole focus is supporting your growth and building your connections.
Post-Graduation Results in 2019
Most startups decide to go on and raise a round of funding after graduating a program—specifically, around 66% of startups. When they do go on to raise money, the average amount of money startups receive is $547K. Where is that money coming from? Primarily angel investors, who make up 47% of that funding, followed by VCs at 32%. Still, there’s a growing trend around startups deciding not to raise any money at all. In 2019, nearly a full quarter of all GAN Startups indicated not wanting to take money from investors. In part, this might be because—looking globally—revenue for startups that have just left an accelerator program is around $160K. And, they’re not going out of business. Only 12% of startups coming out of accelerators in the GAN Community have failed.
What Accelerators Are Doing Differently in 2019
Here’s a quick look at what accelerators most anticipate changing about their programs in the coming year:
- They’re adding more locations. They see the model working and are increasing the number of programs they run because of it.
- They’re increasing seed capital. Last year, accelerators gave $38,000, on average, to startups, and they’re spending a lot of time focused on increasing that number in 2019.
- They’re running an accelerator for a partner. Groups like H-Farm, Techstars, and gener8tor are great examples. It’s a win-win-win in a lot of cases. Corporates get access to innovative startups without having to run a program on their own, accelerators get connected to powerful corporates that make them not only more sustainable but more attractive to founders, and startups get more opportunities to connect and work with strategic corporates, which are also often a great source of potential revenue.
- They’re focusing on later-stage startups. I talked about this earlier, but there’s a growing interest among accelerators to find and work with companies that are a bit further down the path in terms of their product, customers, and revenue.
- They’re raising a follow-on fund. Accelerators who have a fund typically invest in six companies a year out of that fund—in addition to what they gave in seed capital. A lot more accelerators say that they’re going to raise and deploy a follow-on fund in the coming year.
Interested in hearing more? Check out the 2019 Data Infographic.