7/31/2019 Bloomberg Business Week - Startup Boot Camps Seek Army of Entrepreneurs

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7/31/2019 Bloomberg Business Week - Startup Boot Camps Seek Army of Entrepreneurs

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accelerators favor groups over single founders) work with experienced entrepreneurs as mentorsto build their products and learn business skills such as marketing and managing cash flow.They're expected to learn from peers as well. The programs conclude with a pitch day duringwhich teams show off their products to potential angel or venture investors.

Accelerators also confer a pedigree that can help startups get buzz, clients, or funding. InvestorsYuri Milner and Ron Conway in January offered a $150,000 convertible loan to all newgraduates of Paul Graham's Y Combinator , one of the highest-profile accelerators.

Some investors question how the model will hold up in the long term. Bob Okabe, a Chicagoangel investor who funded a Y Combinator startup, says accelerators may not be as successful incommunities that lack the deep bench of entrepreneurs and investors that exists in the Bay Areaor Boulder. "The success of TechStars and Y Combinator has caused a lot of people in a lot of communities to see if it could work for them," he says. "It's unclear to me whether you're goingto have that same quality of participants."

Building Entrepreneurial Communities

TechStars' Cohen predicts that there might be as many as 400 or 500 accelerators globally beforethe herd thins to about 100 that are sustainable. Cohen says TechStars succeeds financially: Of 39 companies seeded in its first three years, six were acquired and 27 are still active, accordingto the TechStars website. The successful accelerators, he says, will be those that focus onbuilding entrepreneurial communities rather than simply investing. "Those that look at it as apure financial play," he says, "are going to be in for a rude surprise," he says. New York is hometo at least a half dozen accelerators, including outposts of TechStars and DreamIt. Owen Davis,founder of NYC SeedStart , runs a 12-week program that pairs digital media startups withcorporate partners such as Comcast (CMCSK ) or TimeWarner (TWX ). Davis questions if "there

are enough good companies to fill all these programs," even though he received 250 applicationsfor five spots.

Accelerators fill a knowledge gap for startups that need the expertise and connections that a venturefirm would provide, even if they don't yet need million-dollar investments. "In the IT arena, where thecosts of creating a company have come down so dramatically, a lot of entrepreneurs will forgo venture

capital financing," says Mark Heesen, president of the National Venture Capital Assn. He says thatbecause of competition, VCs are under pressure to demonstrate that they add value beyond deeppockets.

Occipital , a TechStars alum that makes iPhone apps, didn't raise outside funds beyond the accelerator'ssmall seed round. Still, the founders could consult veterans such as Cohen while they negotiated to sellone of their apps to eBay (EBAY) last year. Jeff Powers, Occipital's co-founder, says companies like his"don't need millions and millions of dollars. They just need a helping hand."

Tozzi is a reporter for Bloomberg Businessweek in New York.

http://ycombinator.com/http://ycombinator.com/http://ycombinator.com/http://www.nycseedstart.com/http://www.nycseedstart.com/http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=CMCSKhttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=CMCSKhttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=CMCSKhttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=TWXhttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=TWXhttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=TWXhttp://occipital.com/blog/http://occipital.com/blog/http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=EBAYhttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=EBAYhttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=EBAYmailto:jtozzi2@bloomberg.netmailto:jtozzi2@bloomberg.netmailto:jtozzi2@bloomberg.nethttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=EBAYhttp://occipital.com/blog/http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=TWXhttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=CMCSKhttp://www.nycseedstart.com/http://ycombinator.com/