Session 2: Incubators and Accelerators Flashcards
What is Y Combinator?
- Accelerator
- Has created a new model for funding and providing services to early
stage startups
What problems do SMEs face?
- Lack of resources
- Lack of reputation
• Lack of trust - Lack of processes/structure
But SMEs also show opportunities
- High growth rates (3-4 digit) possible
• Large ROI for investors & shareholders
• Source of innovation
• Economic growth & job creation
Idea of Accelerators & Incubators: They try to solve the problems that SMEs face in order to profit from the opportunities.
Incubator:
• Long term programs (> 1 year) • Usually take no equity stake • Industry focus: Technology intense companies (e.g., biotechnology, nanotechnology, MedTech…) • Stage focus: Seed & early stage • Not highly selective (nearly every company can enter the incubator) • Strategy: Helping the company to establish and develop first product
Accelerator:
• Short term programs (up to 6 months)
• Usually take an equity stake
• Industry focus: Broad industry focus (mainly information technology orientated)
• Stage focus: early & late stage
• Highly selective (multiple criteria’s analyzed)
• Strategy: Helping the company to
grow fast and on int. scale
Business Model of an “classical” Incubator
Incubator as “usually” a non-profit orientated support program
for SMEs that is funded by universities, government agencies or
NGOs
Schwartz (2013) A control group study of incubators’
impact to promote firm survival
- propensity score matching, control group
- We do not observe that firms located in incubators have higher survival chances than comparable firms located outside those incubator organizations.
- Never find that incubated firms had higher survival rates than nonincubated
firms
Criticism
- Good Companies still fail after accelerator Programs.
- They helping to create a bubble.
