MATTHEW BRAGA, FINANCIAL POST
Tuesday, May 14th, 2013
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They have yet to produce the Hootsuites or Shopifys
If all the world's accelerators got together on a ship, it's likely the lot of them would sink.
Except, well, there's actually an accelerator program taking place on a ship - and, despite its physical location on the vast and open seas, it's the perfect metaphorical harbinger of just how crowded the market for startup hopefuls has become.
In Canada, there are the so-called household names, the likes of Montreal's FounderFuel, Waterloo's Communitech and Extreme Startups in Toronto.
And then there is everything else: accelerators for mobile and accelerators for medicine, accelerators for cleantech and the cloud and wearable computing.
Cineplex Entertainment LP, by way of its CineCoup Film Accelerator (which itself was accelerated in Vancouver's GrowLab) has even adopted the term to describe a rapid - and cheaper - production cycle for indie-made feature films.
If this were a bubble, surely it would be ready to pop.
Everyone wants to create the next Facebook, Instagram, or whatever the next big thing is, and a glut of startup incubators and accelerators of every shape and size have cropped up to meet that demand. However, some are beginning to wonder if the resulting startups - or even the programs churning them out - are of any use.
"Part of me says, this is good," says David Crow, evangelist in residence at OMERS Ventures, FounderFuel mentor, and cofounder of Influitive Corp.
"Most people don't get entrepreneurship training. When you were in school, did anyone tell you that entrepreneurship was a career?"
If they didn't before, they certainly are now; as of March, the Canadian Association of Business Incubation (CABI) listed 104 active incubators and seed accelerators from across the country that follow "industry best practices."
Considering the industry in question didn't really exist just a few years ago, that's a lot of accelerator growth in a short time.
And while venture capitalist Dan Park contends accelerators are a key component of the Canadian startup ecosystem, he acknowledges that a key challenge is maintaining the "high-quality of mentorship and access" as more programs emerge. Mr. Park is the vice-president of San Francisco-based venture capital firm Azure Capital Partners, which opened its first Canadian office in Calgary last month. And he says, unlike in the United States no clear leading accelerators in Canada have yet emerged.
Y Combinator - the U.S.-based program launched in 2005 - is typically regarded as the gold accelerator standard. It was one of the first to send cohorts of hungry founders and entrepreneurs through lean, 12-week sessions with minimal funding and access to experienced Silicon Valley mentors. Founder Paul Graham's discerning eye has produced the likes of online discussion community Reddit, travel rental site Airbnb, and cloud storage service Dropbox - each worth millions.
Another U.S. program, TechStars, has built a network of successful accelerators in cities such as Chicago, Seattle, Boston and London.
But as the number of copycats and competitors increase - David Cohen, founder and chief executive of TechStars, told Forbes last year he believes a new accelerator is launched every day - critics say both the quality of accepted startups and their mentors have only gone down.
"Accelerators play a very important role in the startup community ... [but] it's hard to gauge their success because, frankly, a lot of these [startups] don't really monetize," Mr. Park said. "If you look across TechStars' portfolio of 200 companies, less than 10% have seen a monetization event and Y Combinator's last report showed less than 8% of its companies being acquired."
If that seems low, consider that Aziz Gilani, director at venture capital firm DFJ Mercury, concluded in a 2011 study that Y Combinator and TechStars were the "only two accelerators that had any meaningful exits," and there's little to suggest much has changed since.
"Sunil Sharma, managing director of Toronto-based accelerator Extreme Startups, said it's no different than applying to go to school. There are lots of programs for business, science, or engineering, and it's up to the applicant to choose the one that's best for them.
"You're helping creative and energetic entrepreneurs build something," says Mr. Sharma of the ever-expanding accelerator market. "I don't think a society or region can have too many."
"When you start to network and connect incubators with other incubators and markets, that's where things can get interesting," he said.
That is the idea behind Star-tup Canada Communities, a recent, multi-city initiative launched by the not-for-profit group Startup Canada. The program intends to connect less established or connected startup communities in 15 cities across the country with other accelerators, incubators, mentors, co-working spaces and investors.
Victoria Lennox, Startup Canada chief executive, said strengthening existing infrastructure is a smarter use of funding "than creating the next incubator or regional innovation centre."
When Mr. Crow thinks of successful recent entrepreneurs that the Canadian technology sector has produced, he points to Tobias Lütke, founder and chief executive of the Ottawa-based developer of ecommerce software Shopfiy, and Ryan Holmes, chief executive of the social media Dashboard Hoot-suite - role models with years-worth of experience and expertise that most accelerators or incubators can't easily teach in mere months or weeks.
"Do I believe that the next generation of these companies are going to come out of incubators?" Mr. Crow asked. A few past exceptions notwithstanding, it's hard to say. "Who knows."
mbraga@nationalpost.com