Today, there seem to be more business accelerators than there are startups to fill their classes and cohorts. It seems that not a week goes by without the launch of another accelerator or seed starter fund. In fact, as Peter Relan said in a recent post (riffing on Chris Dixon), accelerators have become an industry segment in their own right. He also goes so far as to surmise that — just as it is for startups — 90 percent of accelerators are likely to fail.
Nonetheless, even if they fail, accelerators are still essential to the growth of entrepreneurial ecosystems not only because they provide a petri dish for innovation, but because they create jobs. In an article in the Wall Street Journal today, Jed Christiansen contends that the fundamental value of seed accelerators lies in their ability to both drive economic growth and foster an entrepreneurial culture within local communities.
Christiansen, along with being the Head of Channel Sales for Emerging Markets at Google is also the founder of Seed-DB, a database for seed accelerators and their startups, which he created in 2009 to track the up-tick of incubators as well as the startups they graduate. Today, the resource is tracking 134 seed accelerators in 33 countries.
But what is most notable is the data that Christiansen has gleaned from Seed-DB on the impact of seed accelerator programs, starting with the fact that accelerators have funded over 2,000 startups, which have raised a total of $1.6 billion in funding. The founder, in turn, estimates that about 100 of these startups have already been sold for a total of approximately $1 billion and, perhaps most importantly, startups that have graduated from seed accelerators have created over 4,800 jobs.
Of course, Seed-DB’s data is to be taken with a grain of salt. The resource is incomplete, has compiled data on a fraction of startup exits (as many don’t report acquisition price) and it relies on startups and others to self-report (alongside the data it pulls from CrunchBase). However, Christiansen estimates that, were all accelerators to self-report, the total number of jobs created would in fact be closer to 7,000.
Startups, small businesses and accelerators are critical pistons in the engine of job creation, there are a few who would argue with that. However, research from the Kauffman Foundation puts into perspective just how important they are, as it suggests that, between 1980 and 2005, all net job growth emanated from companies less than five-years-old. When it comes to how to best reverse an economic downturn, about the only thing you might find politicians agreeing on is the importance of supporting small businesses.
Not to say SMBs are the panacea, but they do play a critical role. For accelerators, it doesn’t mater whether or not all of their startups raise big rounds of venture capital, it matters how well their graduates can build a network of support for their peers and for future companies. The deeper and more robust it becomes, the more success startups find and the more jobs they collectively create.
Giving accelerators their due, Christiansen concludes: “From just one accelerator in 2005, to a handful in 2007, to over 130 around the world today, seed accelerators — and the jobs they create — are a positive change in the economic infrastructure of the technology industry.”
