The 2005 formation of Y Combinator kicked off an explosion of accelerator programs in the U.S., leading to hundreds of entrepreneurs finding financial backers as well as mentors. But as the movement swept through America, the rest of the world largely ignored it.
Today that's changing, and the momentum is fierce. Accelerators are popping up all over Europe, even in areas like Africa, as countries begin farming their own entrepreneurial talent.
That's because the success pioneers like Y Combinator have captured imaginations. The Mountainview, Calif., accelerator has so far groomed and funded more than 550 start-ups, including Reddit and Dropbox. Of those, 172 have been either acquired, shut down or have raised funding worth a whopping $7.78 billion. The average valuation of its companies is $45.2 million, according to co-founder Paul Graham.
Accelerators act as incubators for start-ups, helping promising entrepreneurs through the rocky early days of a company's launch with mentoring, support and often office space. They're difficult to get into, and they push the start-ups hard during a process that can last anywhere from five to 13 weeks. Their end goal: Help founders polish their business plans and build sustainable companies that might attract the interest of financial backers.
To do that, top accelerators give entrepreneurs access to experienced mentors in a host of fields, which can be invaluable in advancing a start-up. Seven-year-old Techstars, for instance—the uber-accelerator founded by David Cohen, Brad Feld, David Brown, and Jared Polis—counts Tumblr CEO David Karp, HubSpot co-founder and CTO Dharmesh Shah, and Foursquare CEO Dennis Crowley among its stable of mentors. Y Combinator pulls in executives from Facebook and other Silicon Valley giants. The final step for many of these programs is a "Demo Day," or a pitch to VCs.