Funding Accelerator Programs April 2019

About the Global Accelerator Learning Initiative The Global Accelerator Learning Initiative (GALI) is a collaboration between the Aspen Network of Development Entrepreneurs (ANDE) and Emory University designed to explore key questions about enterprise acceleration such as: Do acceleration programs contribute to revenue growth? To date, GALI has collected data from more than 19,000 early-stage ventures and partnered with more than 280 acceleration programs throughout the world. Source: Global Accelerator Learning Initiative 2

Source: Global Accelerator Learning Initiative About the sample Definition of “accelerator” Accelerators share a set of program characteristics that distinguish them from other forms of capacity development services. Specifically, they are time-limited programs that work with cohorts or “classes” of ventures to provide mentorship and training, with a special emphasis on connecting early stage ventures with investment. Data collection Between 2014 and 2017, GALI identified over 500 accelerators around the world, and in 2017 surveyed them to provide insight into what acceleration looked like in various geographies and contexts. After removing responses with insufficient funding data, this analysis is based on 139 organizations that run accelerator programs. Source: Global Accelerator Learning Initiative 3

Types of funding for accelerators We asked respondents to indicate the percentage of their 2016 funding that came from eight different sources, then grouped these into four broad “funding types”. Surveyed 139 organizations Source: Global Accelerator Learning Initiative 4

Donor funding is most common is most common and most heavily relied upon Revenue-generating activities are less common and less heavily relied upon Source: Global Accelerator Learning Initiative 5

Donor funding is most common is most common and most heavily relied upon Revenue-generating activities are less common and less heavily relied upon Source: Global Accelerator Learning Initiative 6

More than 50% Five Funding Profiles rely heavily on a single type of funding for their operations (Respondents were grouped by type of funding they rely on for 76-100% of their funding) Source: Global Accelerator Learning Initiative 7

Program Characteristics, by Funding Profile Investor-backed accelerators were most likely to provide direct funding to ventures, while those that rely on their own revenue-generating activities were least likely to provide direct funding. Source: Global Accelerator Learning Initiative 8

Program Characteristics, by Funding Profile Donor-funded accelerators were most likely to support impact-oriented ventures while those funded by corporates were least likely to have this explicit focus. Source: Global Accelerator Learning Initiative 9

Program Characteristics, by Funding Profile More than 70% of revenue-generating accelerators are headquartered in an emerging market, while the majority of corporate-funded and investor-backed respondents are headquartered in a high income country. Source: Global Accelerator Learning Initiative 10

Program Characteristics, by Funding Profile Revenue-generating and donor-funded accelerators tend to be younger (three years or less), while more than 50% of corporate-funded and diversified accelerators had been running for at least 4 years. Source: Global Accelerator Learning Initiative 11

What does this mean? Corporate support and revenue-generating activities are prevalent, but commonly account for less than 50% of an accelerator’s total funding. This indicates that accelerators are using these as supplemental, rather than primary, funding mechanisms. Nearly 40% of the accelerators in our sample do not rely on a single type of funding for their programs. This diversification may signal financial stability, or difficulty in securing consistent funding sources. Revenue-generating accelerators are predominantly headquartered in emerging markets and were not likely to provide direct funding to ventures. This may indicate a lack of outside funding (for example from foundations or corporations) for accelerators in emerging markets, or that the value proposition of accelerators is different for emerging market startups. 12

More thoughts on financial sustainability Common questions accelerators are asking: Should we charge participant fees, and how would we convince entrepreneurs to make that investment? How can we share in our ventures’ financial growth, without investing equity? (e.g. revenue-share models; loans) Other useful facts: Accelerators are (on average) a good investment ~ $1 spent on acceleration translates into more than $1 of additional funds for participating entrepreneurs within one year. Most accelerators are still very new (<10 years old); funding models are still being tested 13

Source: Global Accelerator Learning Initiative Additional resources Read more and explore data on 19,000+ early-stage ventures at www.galidata.org Source: Global Accelerator Learning Initiative 14