Europe’s accelerator bubble is ‘a double-edged sword’

Knights battle by Flickr user Jeff KubinaWhen I asked the question ”are Europe’s startup accelerators speeding out of control?”, I thought it would get some interesting responses. After all, the post aired the privately-held views of some investors and entrepreneurs who worry that Europe is in danger of being overwhelmed by low-quality accelerator programs. That was something that seemed — to me, at least — to go against the prevailing wind, an unstoppable cyclone of activity that has seen dozens start up in the last few months alone.

And it turns out that my post did generate plenty of conversation and feedback. The surprise, perhaps, was that most of it was incredibly high quality. Opinions differed from person to person, but across the conversation, a general picture built up of a continent that desperately wants to build success — but can’t quite agree how.

The initial responses were straight to the point. Is the situation out of control? “Probably” tweeted Belgianfounders. Uli Hegge of the Burda Innovation Lab suggested it was just ”another cycle, that’s all”.

Other answers were directly based on the data we have been collecting. Boris Wertz of W Media Ventures pointed out that Germany, the biggest country in Europe, seemed to have the fewest accelerators. But Christian Thaler-Wolski of Wellington Partners pointed out that there were probably at least 10 more programs in Berlin alone that weren’t on the list.

He’s right, of course — as I said in the original post, we knew there would be plenty more schemes that we hadn’t got in our spreadsheet. In fact, I’ve already found a few more programs in Britain since yesterday — mostly incubator-style groups as opposed to Y Combinator-style accelerators — but still worth listing. So please, this is where you step in: the spreadsheet is open, and if you know of a startup accelerator or incubator that’s based in Europe but isn’t on there, then please add them. It would be great to build up a definitive list.

Are some startups just chum?

But back to the conversation, and the question of whether there are too many accelerators.

Canadian Francis Moran, who has been investigating similar issues over at his company blog, says that the evidence is “abundantly clear” that there is an accelerator bubble on both sides of the Atlantic, along with what he says is 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”.

Others, however, think that the best way to get equipped is simply to jump in — because Europe will only fill in its entrepreneurial gaps by letting people learn how to run startups.

Helsinki-based academic Jon Martin said in the comments that this is the important thing. “In Europe we are not just building startups, but a startup culture — and that requires education,” he said.

Tom Cheesewright of Canddi, a software startup based in Manchester, England, agreed. In fact, he suggested, learning the hard way is sometimes the best experience — and anything that encourages more entrepreneurs to take the leap should be supported.

Jaws: Roy Scheider unwittingly feeds chum to the Great White Shark“If you become ‘chum’ (and many startups will) then at least you got the experience of being in the water… sure, entrepreneurs need to be careful about what they sign up to, and not all programs will be as good as others. But at least this is a step towards a more startup-friendly culture — something we have been missing.”

Does that mean we should simply watch the explosion and wait for the fallout? I’m not so sure that everyone will feel the same way as Tom. Obviously the market will grow — but it seems crucial to me that we interrogate accelerator programs properly, so that budding entrepreneurs get a good understanding of what makes them work. They won’t all succeed (after all, the accelerator model itself is still in beta) but is it dangerous to encourage schemes that could offer unfriendly terms or don’t have really great mentors on board?

Damir Perge of Entrepreneurdex, who was born in the former Yugoslavia but relocated to the U.S. years ago, said that ultimately Europe needed more programs, not fewer — and that the system would balance itself out. “I don’t think Europe has enough incubators or accelerators,” he said. “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.”

Over on Google+, Ben Metcalfe, who left London in 2006 for San Francisco, wasn’t even sure that you should bother with a European accelerator when you could try a similar program in Silicon Valley. But he agreed that even if it was vitally important to find some way to bridge the gap between startups and the truly successful entrepreneurs, not every program was equal.

“I think it is a double-edged sword,” he said. “If accelerators offer much-needed advice and mentorship, that is great, welcomed and much needed. However, I just question the value of some of the people providing said mentorship… VPs at marketing agencies who never really had their own startup are hardly qualified.”

Perhaps one of the most important points was made in the comments by Bill Liao, an Australian investor with SOS Ventures who is based in Germany and Switzerland. He suggested that yes, the market would correct itself eventually — but that the correction process required a lot of feedback on which programs were good and bad… something that doesn’t happen on its own.

“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,” he said.

“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?”

The problem there, he added, was that it’s hard to disentangle a startup’s success from the action of the accelerator it was part of — so it is desperately important that everyone talks about what they got from their programs… even if it’s not a pleasant conversation to have.

“A great startup will likely be robust enough to succeed anyway, and each success will paper over the cracks in a program while the failures just disappear. 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.”

Photograph of knights used under Creative Commons license courtesy of Flickr user Jeff Kubina