Finding a startup incubator or accelerator in the USA that’s a perfect fit for your startup can be tricky. There are 2,301 Accelerators & Incubators in the US. With this amount, it is pretty easy to get lost and choose the wrong one. Here are some factors you need to consider before making the right decision:
- The amount of funding they provide vs. the amount of equity they’ll take.
- Profiles of the mentors and the industry they specialize in.
- How many startups they’ve funded.
- The community around it.
- The percentage of startups they accept and the difficulty of the application process itself vs. what they can do for you.
Finding the right accelerator as well as participating in it might be a time-consuming process, that requires your full commitment and understanding on how it will help to grow your business. We decided to give you a quick overview of the top-5 most popular accelerators, their requirements, and their differences. It might help you to find answers during the evaluation process.
Difference between startup accelerators and incubators
Both startup incubators and startup accelerators offer support to early-stage startups and entrepreneurs. But they do have differences.
Astartup incubator is a collaborative program designed to help new startups succeed. Incubators help entrepreneurs solve some problems commonly associated with running a startup by providing workspace, seed funding, mentoring, and training. The sole purpose of a startup incubator is to help entrepreneurs grow their businesses.
Conversely, accelerators focus on speeding up the growth of a startup that has already built and launched an MVP. Their product is already in the hands of early adopters and they’ve achieved some sort of traction.
The most famous startup accelerator on the list, Y Combinator has launched over 4000 startups. Portfolio companies include Stripe, Airbnb, Coinbase and Twitch.
Y Combinator will invest $500k when you successfully join their cohort. This payment is made on two separate safes:
- $125k on a post-money safe in return for 7% of your company.
- $375k on an uncapped safe with a Most Favored Nation provision.
You can apply to Y Combinator online. Your application will only be considered if you, as the founder, have at least 10% equity in your startup.
After finishing this procedure, you and your team will be requested to participate in an interview.
Recently, as part of Vibranium.VC Softlanding program for startups, we discussed the leading accelerators and the typical mistakes founders make when submitting applications to YC. Below are some of the mistakes we talked about:
- Startups often fail to carefully read the questions, which can lead to some questions being left unanswered or the inclusion of irrelevant information in their answers.
- Responses may contain grammatical and stylistic errors, which can negatively impact the overall quality of the application.
- The company’s description goes beyond 50 characters, which may not meet the application requirements.
- Some startups tend to reuse the same answer for multiple questions, which can indicate a lack of attention to detail and a failure to address the specific requirements of each question.
- The length of the video exceeds one minute and the sound quality is poor.
If interview is successful, you’ll officially join the YC batch. During the 3-month batch, you’ll still have access to all mentorship, guest speakers, group office hours with other companies on your batch and the famous Demo Day.
TechStars is one of the largest pre-seed investors in the world, their portfolio is as diversified as their 7,300 founders are unique — from HealthTech and FinTech, to Web3 and CleanTech; from Miami and Silicon Valley to Lagos and London.
TechStars has funded over 3500 startups to date. Among famous alumni are Uber, Twilio and DigitalOcean.
Techstars invests up to $120k in each startup. They purchase the right to 6% of the company’s Fully Diluted Capital Stock at the Qualified Financing and provide $20k upfront. Their 6% common shares will be issued immediately before the Company’s subsequent equity financing of $250k or more.
You can apply to TechStars using the form on their website. It might take a few hours to fill out your first application — you can reach out to their mentors and advisors before submitting for extra help to ensure you’ve portrayed your startup correctly.
If your application passes the screening process, you will receive an invitation to interview with TechStars (this process usually takes around four weeks).
Ifyou successfully complete the interview rounds, you’ll be invited to meet TechStars screening committee.
If you pass that, you then join a three-month batch of other startups. During 3 months of intense work you are developing your pitch deck, preparing your investor collateral and learning how to communicate your vision to future customers, team members and other key stakeholders. TechStars will then continue to give you support via their alumni network.
With over 2700 startups funded, 500 Global is another leader in the incubation/acceleration arena. Their portfolio companies include Udemy, Talkdesk and Canva.
The 500 Series A Program delivers growth marketing and investment for post-seed and pre-Series A companies and runs in multiple locations globally. They accept applications from Nordic startups to their seed programs in Silicon Valley and San Francisco, and their series A programs in Europe (London and Berlin).
500 Startups offer every company that joins their ranks $150k investment in return for a 6% stake.
Roughly 71% of startups who apply during the first 45 days after the application window opens are accepted into 500 Global programs.
After filling out the application form, you’re in with a chance of being invited to an interview day. The day consists of three back-to-back interviews with members of their investment team. They suggest allocating around three hours for this process, but it can be shorter.
If accepted, the fast-paced program lasts for four months at the location you applied to. Their mentor team consists of experts with operational experience at companies like PayPal, Google, YouTube, Apple, Twitter and more.
On top of the hands-on mentorship, they offer talks and office hours on everything from distribution and customer acquisition to design, UX and fundraising.
At the end of the four-month program, you’ll take part in a Demo Day in front of investors and industry leaders.
Founded in 2012 Alchemist accelerator with total funding of $2.1B runs a 6-month long program. It accepts startups operating in sectors such as IoT, digital health, Fintech, etc. The firm takes 5% equity in return for its services.
You can fill out the online form on their website. The total amount of startups accelerated exceeds 500 and around 52% of startups were funded after graduating from the program.
Plug and Play Tech Center
Plug and Play Tech Center is a California-based accelerator. Founded in 2006, they’ve helped over 1360 startups get to market. Portfolio companies include Dropbox, Honey, and PayPal. They are active in 50+ locations globally, including the U.S., China, France, Germany, South Africa, Singapore, Indonesia, Brazil, and more.
Plug and Play typically invests between $50k and $250k in startups ranging from Pre-Seed to Series A. You also have the opportunity to gain up to $1M in follow-up investments from Plug and Play directly.
There is no fixed equity percentage associated with these investments, however, they typically get between 1-5% of the company depending on the amount invested.
The industries they focus on include Agtech, Animal Health, Brand & Retail, Crypto & Digital Assets, Energy, Enterprise, Fintech, Food & Beverage, Health, Insurtech, IoT, Maritime, Media & Ad, Mobility, New Materials & Packaging, Real Estate & Construction, Smart Cities, Supply Chain, Sustainability, and Travel & Hospitality.