Pittsburgh Ventures

Jon Cavell, aka the famous @BurgherJon, follows up to a post I made yesterday about the difference between accelerators and incubators:

@aveeck a follow up to your post this morning, how does the rise of accelerators impact the VC process? #AskTheVC

I think the proliferation of accelerators is a great boon to the entire startup economy, and hence to venture capital as well.  I selfishly hang out near as many accelerators as I can, watching to see what sorts of interesting startups come out of them for our firm to talk to.

But not all people feel that way.  I have a partner who is negative on accelerators, and incubators in general.  His issue is an age-old question:  are entrepreneurs born, or can they be made?  He questions whether accelerators attract real entrepreneurial talent.  He strongly believes that “true entrepreneurs” just do it – they don’t need any help or coddling to realize their vision.

I can understand this point of view, and while I come down on the side that believes that accelerators are a good thing, I am an empiricist – so if the data don’t back up my belief, I am willing to be corrected.  I think the early returns on the data argue in favor of accelerators being a good thing.  The top accelerators, like YCombinator and TechStars, have an impressive list of exits already – I  don’t have any comprehensive analysis of exits and returns, but there have recently been several articles that mention a number of exits.

Why are the top accelerators getting these successes?  I think they lower the activation energy (however slightly) to get founders/entrepreneurs who are deciding whether or not to start a business to actually do it.  I also think the best accelerators have a strong media/PR effect that encourages strong entrepreneurs to join them (for the benefits of associating their startup with the accelerator brand) and also gets the best investors and acquisition companies to pay attention.

I have one data point of my own.  I sit on the advisory board of AlphaLab, an accelerator here in Pittsburgh, and during the incoming company interview process in back in 2009 I saw a startup with three outstanding founders and a very compelling product.  My data point is a bit muddy because they chose not to join an accelerator and just raised an angel round and got started.  But I stayed close to the team, helped mentor them a bit with the idea and product they were building, and my firm eventually invested a Series A round with them.  Schoology is a promising early-stage  portfolio company of ours, and I likely never would have seen them had it not been for my involvement with the local accelerator.

I am a big believer that the accelerator trend is good for venture capital.  As a matter of fact, I am working with a couple folks locally to build a new accelerator that is looking really promising – but for that, stay thirsty, my friends.

Related articles

• Accelerators vs. Incubators (pittsburghventures.com)
• Ask The VC – please send your questions! (pittsburghventures.com)