A guide to startup accelerators.

I am a part of cohort 25 of the Entrepreneurs Roundtable Accelerator. It is one of NYC’s oldest and, as the website claims, “New York’s leading tech accelerator.” As I write this, demo day is approaching in ~3 weeks, so I am nearing the end of the four-month program. ERA runs two four-month programs – one during summer and one during winter. Before joining this program, I did not know what an accelerator's value-add was. Here, I aim to break that down. I am going to use my experience as a reference point.

Note: This is not an ERA review. But as a one line review, I highly recommend ERA, 10/10.

What is the point of an accelerator?

As the name suggests, an accelerator "accelerates” your progress. Sometimes, that is at the early stages of your business; other times, it’s when your startup is plateauing. There are a few key things that a good accelerator provides:

• A solid network.

• Capital.

• Mentorship will help you better tell your business story and clarify what you are trying to build.

The Network

My personal opinion is that an accelerator’s network is its greatest moat. YCombinator will be hard to topple as the reigning accelerator king because of its storied history and deep network of the world’s best startup operators and alumni. Especially when you are new to an industry or early in your career, you simply don’t have the network needed to build a company from the ground up. An accelerator will be that network for you. Being one of NYC’s oldest and largest accelerators, ERA’s network is hard to top on the East Coast. Every week, we have a speaker series, and the kind of speakers that they pull in is very impressive, ranging from unicorn founders to goated VCs. Adding to that, the 300+ alumni companies, many of which have been vastly successful, are immensely helpful in guiding the younger companies (like mine).

It is for this reason I am somewhat skeptical of newer accelerators or those started by people without an extensive network. If you are to join an accelerator, I would recommend doing some due diligence on the breadth and depth of their network. One thing to note for Techstars, each Techstars program is its own beast, so do your due diligence accordingly.

The Capital

This is obvious, but accelerators provide capital to companies at their earliest stages. We got the standard 2023 ERA deal (which changes every few years) – $150K/6% post-money SAFE.

Startup capital is costly for founders. They take a sizeable chunk of equity in exchange for the capital and resources that they provide. Let’s put this into context; here are some standard deals from some other accelerators:

• ERA: $150K for 6% (pretty straightforward, no caveats)

• 500 Startups: $150K for 6% (but $37,500 deducted as “fees” so it’s $112.5k for 6%)

• Techstars: $20k for 6%, and an option $100K convertible note at a 3M cap (this is the most confusing deal and has a lot of implications. It’s also by far the most expensive deal I have seen within accelerators. Here are the complete terms)

• YCombinator: $125K for 7% and an additional $375K, uncapped most favored nation (considered by many as the gold standard deal in that while it’s expensive, it provides the most upfront capital, $500k.)

• AI2 Incubator: They take 9% upfront in exchange for a $30,000/founder stipend for three months (maximum of $90,000 for three founders). There is the scope of potential follow-on funding 3-6 months down the line, depending on performance.

These should give you a reference for how much capital accelerators usually provide.

If there is one thing you should take away from here, don’t ever join an accelerator that charges your money. That’s not an accelerator but just a business that does not have its incentives aligned with your startup.

The Mentorship

Why are accelerators so expensive for founders? It’s because of this. Their job is to mentor you and help you attain clarity in your business and strategy. A good mentor goes a very long way and can change the face of your business. If your accelerator doesn’t give you generous access to top mentors, you should probably not be joining an accelerator and instead raise from pre-seed investors or angels at better terms.

The best way to gauge the quality of mentors in an accelerator is to talk to the alumni of accelerators and ask them more about it.

Some Twitter accelerator drama.

This post was inspired by some accelerator drama I came across on Twitter

The gist of the drama is that Ali Partovi, the founder of Neo, another accelerator, made claims that rubbed the YC partners the wrong way. And as things progressed, the YC partners started making light of what they claimed was poor behavior by Ali.

The one takeaway from here is that you always do your own due diligence on accelerators. Talk to alumni, talk to mentors. Get all sides of the story before making a decision. In this particular scenario, I am not taking sides, but after reading this, I’d do much more careful due diligence before joining Neo.

So, what is the best accelerator for me?

It depends on you. Certain accelerators are leaders in an industry. For example, If you were to get into biotech, I would look at SOSV. Generalist accelerators like ERA and YC are great for all kinds of startups but look at the general patterns in the type of companies that they work with. From what I hear, some Techstars are better for an industry then other Techstars (Techstars has dozens of programs in different cities, all run by different management)

What convinced me to join ERA? Hands down, the alumni. Very early on in our interview process, the alumni from ERA were involved. The fact that these successful full-time founders are still actively giving back to ERA years after graduating was a very strong signal to me.

As a resource, here is a list of accelerators that are ranked based on exits: https://betaboom.com/blog/best-startup-accelerators/

I know people in YC, AI2, Techstars, and beyond. Email me, and I am happy to help.