t he number of start-up incubator and accelerator programs in the United States continues to grow.
These are programs for which entrepreneurs must apply. In some cases, the programs require that the
entrepreneur or team of entrepreneurs surrender a small amount of equity for a similarly small amount
of seed funding. In other cases, the start-ups pay a modest amount for participation or rent but do not
surrender equity in their firms. The greatest advantage of getting into one of these programs is the
mentorship opportunities they provide. Start-up incubators and accelerators are also fertile places for
entrepreneurs to meet potential co-founders, business partners, and/or equity investors. The two most
well-known accelerator programs are Y-Combinator and Tech Stars. Y-Combinator is located in the
Silicon Valley. It provides seed stage funding, mentorship, and networking opportunities to its
participants in two, three-month sessions per year. Started in Boulder, Colorado, TechStars is similar to
Y-Combinator in that it provides seed stage funding in three-month membership programs. TechStars
has now expanded to Austin, Boston, Chicago, London, new York City, and Seattle. While admission to Y-
Combinator and TechStars is very competitive and requires a start-up to be physically present where Y-
Combinator and TechStars is locted, there are a growing number of start-up incubators and accelerators
in most American cities. To illustrate this point, the following is a list of the incubator and accelerator
programs available in Austin, Texas. While Austin may offer an above-average number of programs, a
little digging turns up a surprising number of similar programs in medium-sized and large American cities
and on college campuses. DreamIt Austin: A three-month program that provides the entrepreneurs it
selects with pre-seed funding (up to $25,000), mentoring from seasoned entrepreneurs, access to
follow-on capital, and work space in a creative, rigorous start-up environment. Capital Factory: offers an
accelerator program and co-working space and hosts meetups and other events for aspiring
entrepreneurs. The accelerator program matches $50,000 angel investments and then targets select
portfolio companies for $250,000 follow-on investments. Tech Ranch: A for-profit incubator that offers
coworking space along with consulting services and specialized programs to help entrepreneurs launch
their ventures. Its flagship programs include Venture Start, which is a one-day program, Venture Forth,
an 8-week bootcamp, and Venture Builder, a 26-week partnership TechStars Austin: A three-month
accelerator program that puts seed money into start-ups in exchange for a small amount of equity.
TechStars provides participating start-ups workspace in a stimulating environment, along with access to
top-quality mentors. Incubation Station: An accelerator program focused on consumer goods
companies. Selected start-ups participate in intensive 12- to 14-week mentoring programs designed to
maximize the potential for success. Provides participants access to high-quality mentors and other forms
of industry-relevant support. Austin Technology Incubator: The start-up incubator at the University of
Texas at Austin. It is affiliated with the university’s IC2 Institute. Texas Venture Labs: Supports business
start-ups on the University of Texas at Austin campus via mentoring, team building, market and business
plan validation, technology commercialization, and domain knowledge needed to start and grow
entrepreneurial ventures. Longhorn Startup: A semester-long program for undergraduate students on
the University of Texas at Austin campus. It places students in interdisciplinary teams to start real
companies. Each semester ends with participating students pitching to investors at a Demo Day. SXSW
Accelerator: Competition takes place during South by Southwest, which is an annual film, music, and
interactive (technology) conference held in March of each year. The judges choose 18 finalists,
Questions for Critical Thinking
1. If you were starting a new venture, do you think you would benefit from participating in a business
incubator or accelerator program? If so, what do you think the primary benefits would be?
2. Find an example of a start-up incubator or accelerator at the college or university you are attending or
in the town you live in or a nearby city. Describe the program. Which one of the Austin, Texas, programs
does it most resemble?
3. If a student has a promising business idea, what can s/he do while in college to improve his or her
chances of being accepted into a well-regarded incubator or accelerator program?
]’4. Make a list of the types of business partnerships that participants in a business incubator or
accelerator program are likely to fashion.