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Summary:

In the last year Europe has witnessed an explosion of accelerator programs, with more and more launching all the time. But while it looks like good news for entrepreneurs, some worry whether the continent can really support such a glut of activity around startups.

Speeding car by EJ Callow on flickr

Speeding car by EJ Callow on flickrBarely a day goes by without news of some new accelerator program in Europe dropping onto my desk. In the last few days, for example, I’ve received notice of Poland’s Gamma Rebels (“a 3 month long program in Warsaw”) and Dutch group Rockstart (“intensive support to entrepreneurs for the successful start to their businesses during the first 100 days”). Recently I’ve written about a few others and spoken to a lot more: big accelerators, small accelerators, accelerators with international ambitions and accelerators focused on their home country.

Nearly all of them offer a Y Combinator-style experience: short bootcamps usually lasting two or three months in which entrepreneurs with an idea are given a little money, access to mentors, and the space and time to concentrate on building something. Several of them are part of wider accelerator networks spun out of successful programs, such as TechStars; some of them are closely related to larger venture capital companies, universities or government networks. All of them promise to take your startup and turn it into something bigger and better.

For a while now, I’ve been trying to wrap my head around the size and scale of this explosion. A few weeks ago I asked Twitter followers and readers to help compile a list of the increasing number of programs around Europe. With their help, we came up with a list of almost 50 current or recently active schemes that identify themselves as accelerators, accelerator-style incubators, or bootcamps focused on seed or pre-seed investment.

I’m sure there are more we could have included, too, and no doubt there are more coming. But still. Fifty!

Here’s a map to give you an idea.


View GigaOM’s European accelerator map in a larger map

On the surface, this is great news for all concerned. Entrepreneurs have more options when they’re getting started; big investors can pass the risk of seed funding on to somebody else; reporters like me have an easy pipeline of new companies to write about.

It works for everyone. Or does it?

While in public almost everyone is bullish about this sudden expansion, privately they are not all so sure. Several investors and have expressed concerns to me that the sudden influx of bootcamps is bringing down the overall quality of ideas.

Others question whether there are really enough high-quality mentors to support an ecosystem that is growing so rapidly. One entrepreneur — a young startup boss who worked through an accelerator program several years ago — spoke to me about the feeling that low-rent investors are using this system to prey on a whole generation of startups.

One particular concern is that many of these new accelerators are too focussed on their local market. Europe is a patchwork of countries and cultures, and there are accelerators with tight remits to support local entrepreneurs in nearly all of them… in France, in Estonia, in Ireland and elsewhere. If these local programs do not have quality mentors with broad international experience or ambitions, they ultimately lack vision; and that problem is easily exacerbated by backing from local universities, government organizations and investors who are not technology entrepreneurs themselves. We already know that Europe has a reputation for clones: it needs more entrepreneurs focused on becoming pan-European or global players, not just being the best Groupon clone in Germany.

And then, inevitably, there’s the question of money. There are a few horror stories about accelerators who take significant equity without delivering much serious benefit, or some that force entrepreneurs to sign terrible preferential terms that actually make it difficult for subsequent investors to come in. You can take a look at some of the terms offered by different programs on our spreadsheet.

Bringing in capital is already starting to prove a problem elsewhere — a few days ago on GigaOM, our very own Colleen Taylor wrote about the concerns that there is a crisis in Series B funding, with too little later stage venture money to support the number of companies that are coming through with seed rounds. And that’s in Silicon Valley, the heartland of venture capital: what happens in Europe, where the approach to funding is much more conservative?

So are there too many accelerators for the European market?

When I spoke to Mark Hales, a business guru who has come from outside the technology industry to kickstart Britain’s Oxygen Accelerator, he batted off my questions about the danger of over-saturation.

“In fact, the opposite’s true,” he said, suggesting that more accelerators were required to get the best businesses working. In fact, he said, competition and cooperation were important parts of this explosion. “We’re starting to share the mentor pool, to share and distribute our investor networks, to share and distribute actual applications. We’re not at a stage where we’ve hit saturation.”

Some other accelerator organizers backed up that position. Antti Ylimutka of the Aalto Entrepreneurship Society, which is involved in Startup Sauna and Summer of Startups in Finland, suggested that more is better.

“My personal opinion is that the explosion at least helps entrepreneurship emerge as a viable career option for a wide audience in Europe,” he told me. “Too long students have wanted to work for big corporations like Nokia. We need them too, but if we want to have more new Nokias, we simply need to have more startups.”

Perhaps you’d expect accelerators to say there’s no problem with this explosion. Nobody, after all, wants to sound bitter or angry at competitors — or undermine themselves. But who else is going to ask the question? Most of the investment community want to retain good relationships with these hothouses — since they worry about missing out on a great opportunity. Similarly, the European media (for the most part) prefers to enjoy the conveyor belt of stories that accelerators provide.

But there seems to be that right now we’re witnessing the quantity versus quality. ? This is not limited to Europe, of course. The accelerator explosion is happening everywhere. But in Europe, where the are more limited, it feels as if we are watching the formation of an accelerator cargo cult. Investors with spare cash — governments, universities, local businesses — seem to believe that if they build something that looks like an accelerator then, hey, what could go wrong?

A few people I spoke to hinted at an underlying problem. Roxanne Varza, who recently left Techcrunch France to join Startupbootcamp, told me that the number of programs was “definitely not the problem right now” but added that right now “every program is very different” and that entrepreneurs should pay close attention to issues such as transparency, terms and quality of the accelerators they approach.

And Aalto’s Kristo Ovasaka — another face behind Startup Sauna — suggested that there would, eventually, have to be some sort of reckoning.

“There is no school to learn how to build startups, and most of the universities fail in teaching, too,” he said. “I believe acclerators have an important role to play in educating first-time entrepreneurs.”

“On the other hand, we need clear rankings to be able to assess the quality. This will happen over time.”

If the assumption is that the market will correct itself, perhaps the real test for Europe’s accelerators — and of all accelerators in general — is whether that correction can happen fast enough to stop great companies and great entrepreneurs being torched on the bonfire.

After all, even the harshest critics of the programs aren’t saying that accelerators are a bad idea full stop. What they all seem to fear is that a bad accelerator program can kill off a great product and slow progress down.

And that, surely, is precisely the opposite of what they’re meant to achieve.

Photograph by ejcallow on Flickr, used under Creative Common license

  1. Replicating existing success well is often a good strategy as Startupbootcamp is doing by being part of the TechStars franchise which is very “open source” in its DNA.

    For the others simply put there will be three stages of filtering in my view;

    Where will the investment community end up hanging out?

    What will vocal entrepreneurs say about their experiences?

    Which accelerators will boast the biggest actual successes?

    Unfortunately most of these filters are particularly good be cause a great startup will likely be robust enough to succeed anyway and each success will paper over the cracks in a program while the fails ay just disappear.

    Also being vocal is no guarantee of you being good so the opinion of the entrepreneurs who are dissatisfied by one program or another is not necessarily a good measure.

    The best we might hope for is that those teams who go through successfully become vocal after they have made it and tell the truth about their accelerator experience.

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  2. During a panel on accelerators during last week’s International Startup Festival in Montreal, I asked the panelists — Dave McLure of 500 Startups, Techstars’ Katie Ray and Ray Luk of Year One Labs — whether they thought there was an accelerator bubble in place leading to too many programs chasing too few quality startups. To a person they agreed, although you might expect these folks from more established programs to inveigh a bit against more recent entrants.

    I asked the supplemental question whether the bubble would lead to, or already has led to, the arrival of pure sharks into the incubator pool — avaricious opportunists who see the potential to acquire not-insignificant stakes in handfuls of startups for relatively small sums of money. With time running down, I got a quick “yes” from Katie and concurrence from Dave that, indeed, “there be monsters.”

    We’ve written enough about accelerators and incubators on our blog (www.francis-moran.com) to make it abundantly clear to me that there is both a bubble well underway and a growing number of sharks. If entrepreneurs are to avoid becoming chum, they need to do a lot of due diligence before signing up for one of these, a task for which very few of them are very well equipped.

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  3. Kristo is right. In Europe we are not just building startups but a startup culture and that requires education. Even if 95% of the ideas going into incubators fail completely, a lot of people are building networks and getting a hand-on education. At this stage that’s really important.

    There’s also the point to make that no-one knows what’s going to work anyway so the screening required to reduce the numbers would be quite arbitrary.

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  4. I don’t think Europe has enough incubators or accelerators. I was born in Europe and the mentality is just different. I think the problem is that there is not enough competition. Sure, any sector or idea gets to the point of saturation or becoming overcrowded but what matters is the business model of each business species. Everyone is trying to be another Y Combinator and this may not work for a particular region or country due to cultural and entrepreneurial differences.

    And you’re going to have sharks no matter what. Transparency is critical so that inexperienced entrepreneurs do not get taken for a ride. I think your column is a good reference for entrepreneurs considering accelerator programs.

    Also, not every entrepreneurs needs to be accelerated. For some, it may be a waste of time. In Europe, I think there is a greater need for acceleration than in America.

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  5. I have to agree with Jon: the point is as much the education as the output. If you become ‘chum’ (and many startups will) then at least you got the experience of being in the water. Too many of the people who might be launching tech startups in the UK are stuck on the consulting/agency treadmill. Incubators give the motivation and the financial freedom to leap off the treadmill and focus on building a product. Sure entrepreneurs need to be careful about what they sign up to, and not all programmes will be as good as others. But at least this is a step towards a more start-up friendly culture – something we have been missing.

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  6. Hi! I like your post about startup accelerators in Europe. I agree that the more there are the better because it helps creating a great startup ecosistem.
    I just want to add that there is another program going on. It is called Wayra and it is 100% backed by Telefónica and it have 8 chapters (and growing) one in Madrid and the rest in 7 different countries in LATAM.
    I think that it is a big movement that a big company such as Telefónica joins to the startup scene. Also the LATAM approach are good news!

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  7. Bobbie Johnson Tuesday, July 19, 2011

    Great comments everyone, really good conversation. I’m going to follow up with another piece later on drawing the different threads together. Thanks!

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    1. Excellent work Bobbie in aggregating the accelerators. I spent time last year in Europe raising capital. I was born there (Serbia) and I see the same need in every country I visited there.

      In reality, Europe either needs one major regional hub to address the needs for the entire Europe (like we have in Silicon Valley) or each country has to build out hundreds of accelerators.

      Still, there has to be some type of regional concentration whether at the Continental level or country level. In my opinion, having lived in Silicon Valley and outside, one of the big reasons for Silicon Valley success is the highly, concentrated focus of Silicon Valley. If you’re an entrepreneur or investor, you don’t have to travel long distance to get a deal done. In Europe and rest of USA, it’s a different ball game.

      So one big topic to consider is how important is the regional variable in the success of an accelerator and “tech hub” ecosystem. Another is liquidity. As accelerators pop up everywhere in USA and Europe, what does it take to become another Silicon Valley. I have spent countless of hours thinking about it. For sure, the density of the nodes is critical and this why regional concentration is one of the key market variables. This is confirmed by the simple fact that investment money wants to invest local — on the average. There are exceptions to every rule.

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  8. Hi Everyone

    Definitely agree with a lot of these comments – these accelerators are helping to build the entrepreneurial culture and reduce risk for entrepreneurs in Europe (where the entrepreneurship image still lacks a bit of luster).

    Many feel that Europe may lack experienced mentors and active investors – not sure I agree. Some countries still lack elements of a local ecosystem and putting together an accelerator helps bring the pieces together. We saw this in Madrid, where we launched Startupbootcamp after both Startup Weekend and Tetuan Valley Startup School worked their magic.

    And as a side note, how many accelerators are there in the US/Silicon Valley?

    We’ve published a response to this article on the Startupbootcamp blog, feel free to check it out
    http://www.startupbootcamp.org/2011/07/the-european-accelerator-problem/

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  9. Thank you for an interesting article and valuable summary spreadsheets. I believe that we should not worry about the quantity at the seed stage for a number of quoted reasons as well as a simple “business fertility” rule – new business survival rates. Instead, quality always matters: quality of ideas, teams, execution capability in particular, networks, mentors etc. Looking forward to observe graduations from the booming accelerators and then make conclusions, take-aways and best practices for the next rounds

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  10. Bobbie – Great work and overview!

    Based in former GDR-part of Germany, we have a strange situation:

    lots of innovative entrepreneurs
    no market with financial close by
    state funding of incubators run by big institutions
    low wages
    no open entrepreneurial eco-system (ideas were all too often transferred into the West, since 2000 the mindshift of collaboration across boundaries has decreased)

    What is missing is sometimes just help on specific questions, mentors, or having someone giving honest (hard) feedback on an idea you have come up with.

    The goal is to build an entrepreneurial eco-system. What is it that is needed?

    >> free education about what it means, and doing small changes that show the benefit.

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