Startup accelerator trend decreasing this year - report

November 19
8:03 PM 2013

A TechCrunch report by Mark Lennon said that the trend for startup accelerators has slowed down this year, especially in North America. CrunchBase projected at least 170 accelerators around the world by the end of 2013. However, seed stage investments in startups for the year has decreased compared to that in 2012 (see graph above).

With only a few accelerators dominating the market, the report said new programs are finding it a challenge to get the best founders and provide seed funding in young firms that show potential. The market for early stage funding is already overcrowded which also explains why a lot of young accelerators and incubators seem destined for failure, the report said.

Y Combinator is the first modern accelerator that gave seed funding to its first batch eight young firms in 2005. This was followed by other accelerators like SeedCamp, TechStars and Founder Institute. From then on, the accelerator trend has flourished in the domestic and international scene. Because of their presence, tech accelerators have removed the obstacles for companies outside Silicon Valley in terms of allowing them access to capital.

Eighty international accelerators or incubators from 36 countries have funded 388 international startups from 49 countries in the past two years. This is double the accelerator figures in 2009. In terms of company diversity, the companies funded were nearly three times as diverse compared to those funded in 2009. Community-based programs are mainly responsible for spreading the startup fever around the globe. Companies based in Silicon Valley are also racing to conquer Europe where new talent and opportunities can be found. In the past years, the accelerator trend had exhibited continuous growth that it became noticeable when a dip was noted for the first time in accelerator investments in North America this year.    

Although the overall trend has slowed, the report said that startups who have graduated from top accelerators are able to raise large amounts from venture capital partners. These graduates include Dropbox, Airbnb, Crowdtilt and Pebble.

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