Recently I’ve been involved in a discussion about creating a startup accelerator and while I can’t share the details of the discussion I’m involved in, these are some of the resources that you might be interested in if you are thinking about creating an accelerator in your area or at your educational institution.

The current wave of startup accelerators or ‘startup factories’ as they’ve been referred to is not a new concept. Prior to the startup bubble in 2000 there was a wave of startup accelerators, most of which ceased to exist due to unsustainable economics. You can read more about the first wave of incubators in the report by Morton T. Hansen, Henry W. Chesbrough, Nitin Nohria, and Donald N. Sull of the Harvard Business School.

The second wave of startup accelerators, arguably originated by Y-Combinator in 2005, have more sustainable business plans and a better chance of remaining in the industry unless a Euro or Dollar crisis happens or unless some other “Black Swan” flies in.

Source: http://www.nesta.org.uk/library/documents/StartupFactories.pdf

As you conceptualize the idea of your startup, these are some great resources to learn from:

A comprehensive post by Ben Yoskovitz of Year One Labs, a Lean Startup accelerator: So You Want to Run a Startup Accelerator…10 Things to Think About When Starting a Startup Accelerator.

A comprehensive overview of existing startup factories: who, where, how much
http://www.nesta.org.uk/library/documents/StartupFactories.pdf.

A list of 102 startup accelerators:
http://blog.shedd.us/321987608/. 

Lessons learned:
http://www.instigatorblog.com/lessons-learned-lean-startup-accelerator/2011/06/06/

Are you thinking about a startup accelerator? Some Accelerator Resources:
http://la.startupfdn.org/2011/09/16/are-you-thinking-about-a-startup-accelerator/

“How to Build a Venture-Finance Ecosystem”, practical principles that the Babson Entrepreneurship Ecosystem Project have been identifying and developing for public leaders: http://goo.gl/fN4gh

In the last 5+ years, startup accelerators (also dubbed ‘startup hubs’ and ‘startup factories’) have proven themselves to be effective in bringing startups from ideas to viable businesses. With the number of accelerators now rapidly increasing in North America and Europe, comparing and contrasting the methods and numbers of the most prominent firms is valuable in providing a picture of what the model for a successful accelerator might look like.

In his recent post entitled ‘Why Startup Hubs Work’, Paul Graham of Y-Combinator gave a list of the qualitative reasons why startup hubs are useful, “I think there are two components to the antidote: being in a place where startups are the cool thing to do, and chance meetings with people who can help you. And what drives them both is the number of startup people around you.”

Notable US seed accelerator programmes by location showing total number of startups funded to 2010
Source:  p.8, The Startup Factories The rise of accelerator programmes to support new technology ventures http://www.nesta.org.uk/library/documents/StartupFactories.pdf.

In May, Tech Cocktail released their ranking of the top 15 startup accelerators and incubators based on their participant companies’ rate of investment post-program, the overall success of the companies, and on the program characteristics of the accelerators themselves. The #1 spot was a close finish between Boulder, CO’s TechStars and San Francisco’s Y Combinator.

To provide a clear side-by-side comparison, we will take a look at both TechStars and Y Combinator as well as Massachusetts’ own MassChallenge in the categories of up-front investment, location, duration, equity, and application/acceptance rate.

TechStars
For profit
Investment: Up to $18,000
Optional Convertible Debt: $100,000
Location: Boston (MA), Boulder (CO), New York City (NY), and Seattle (WA)
Duration: 3 months
Equity: 6%
Acceptance: 10 companies at each location (total of 50)
http://techstars.com/funding/

Y Combinator
For profit
Investment: $11,000 + $3,000 per founder (e.g. $17,000 for two founders)
Optional Convertible Debt: $150,000
Location: San Francisco (CA)
Duration: 3 months
Equity: 2-10%, usually 6 or 7%
Acceptance:  60 companies in two sessions
http://ycombinator.com/faq.html

MassChallenge
Non-profit
Investment: Given in the form of prizes which fluctuate depending on the judges (~15-20 prizes of $50-100k)
Location: Boston, MA
Duration: 4 months
Equity: None
Acceptance: 125 companies accepted resulting in 26 finalists (in 2011)
http://masschallenge.org/accelerator/2011

500 Startups
For profit
Investment: $25,000-$100,000
Location: Mountain View, CA
Duration: 3-6 months
Equity: ~5%
Acceptance: 12 in February, 2011; 21 in June, 2011; 140 total investments
http://500.co/2011/02/10/boom-goes-the-dynamite/

A comprehensive overview of existing startup factories: who, where, how much
http://www.nesta.org.uk/library/documents/StartupFactories.pdf.