by Susan Cohen,
 Benjamin Hallen,
 
and Christopher Bingham

What role do business accelerators play in boosting the growth of early-stage companies? Accelerators provide a structured environment of mentorship, education, and resources in exchange for equity. And they work. Research involving numerous accelerator programs and interviews with various stakeholders reveals that startups in these programs typically achieve higher funding and survival rates. Three key strategies identified for their effectiveness include compressed advice, which offers intensive mentorship and customer feedback to refine business strategies quickly; friendly sibling rivalry, encouraging open sharing and competition among startups for accelerated learning and execution; and schedule transitions, enforcing structured developmental activities to balance broad learning with focused execution. These strategies, effective in the high-paced startup environment, are also applicable to broader organizational contexts for driving innovation and growth.

Business accelerators, often termed “startup accelerators” or “startup factories,” are organizations dedicated to fostering the rapid growth of early-stage companies. Typically operated by investors, corporations, or independent entities, they offer structured programs that usually span three to four months, providing selected startups with a combination of mentorship, educational workshops, networking opportunities, and often a modest amount of capital and office space. In exchange for these resources, accelerators usually require a small percentage of equity in participating startups.

But are accelerators effective at turbocharging early growth? To be sure, some of the hottest names in the tech world came of age in accelerators, including Postmates, Airbnb, DigitalOcean, Coinbase, and Stripe. And accelerators are growing in popularity in the corporate world, with companies such as Target, Microsoft, and AB InBev all introducing branded programs.

Our research from multiple studies backs up this anecdotal evidence; we found that startups participating in an accelerator raised 50% to 170% more from investors and were more likely to be alive or acquired than similar startups that applied to the accelerators but were not accepted.

We have also studied how accelerators are organized and how the best programs create value. Collectively, we have visited dozens of programs and interviewed over 200 entrepreneurs, program directors, and mentors. Through this work, we’ve uncovered three ways accelerators can enable startups to grow quickly.

Gather Advice in Intensive Bursts
One of the touted benefits of accelerators is that founders and their teams can receive guidance and mentoring from a large pool of customers and mentors, including current and former entrepreneurs, corporate executives, investors, suppliers, accountants, and lawyers. A key decision facing accelerators, though, is how to have startup managers space mentor meetings — i.e., whether they should spread out or compress feedback sessions into bursts. As a hypothetical: Should an accelerator require founders to meet with a different mentor each week for 10 weeks or meet with 10 mentors in one week?

We suggest the latter, compressed approach. This contradicts received wisdom (and common practice) in the industry that spacing advice over time allows for more experimentation and better information absorption. However, we found that startups at the accelerators that spaced out advice had lower performance and more difficulty processing advice. For example, one accelerator directed startups to meet with mentors every other week throughout the program, giving founders time to build and test product enhancements accordingly. The CEO of a startup in this accelerator told us, “I was taking in every mentor’s piece of feedback, and that led to way too many changes for me and my team…every two weeks, we had a new project we were building.” This team redesigned and rebuilt its product based on the opinions provided in single meetings. And indeed, this was generally the pattern we observed: In accelerators that encouraged spacing out advice, startups often had difficulty knowing when to incorporate suggestions (and when not to).

By contrast, startups got more out of accelerators when advice was compressed in intensive bursts. Startups in one such accelerator met with an average of 75 mentors and up to 200 customers during the first month of the program. During that time, founders had less time to build products, even minimally viable ones. But the amount of advice they received in such a short period of time helped founders sharpen their vision from the outset. A founder at this accelerator explained that the abundance of mentor advice early in the program helped his startup “get off a track that was not going to be successful and may have taken us six or nine months to find out [had we relied on experimentation].”

Gathering advice from mentors and stakeholders in intensive bursts helps startup managers overcome natural tendencies to resist feedback when it challenges their current plans. It takes intensive repetition to combat confirmation bias. After hearing similar negative advice many times in quick succession, startup mangers eventually acceded. Similarly, gathering advice in bursts makes it easier to compare advice from different sources, which makes it easier to see when advice is a poor fit. Finally, and particularly critical, gathering advice in bursts pushes managers to think more abstractly and see higher-level patterns. As one accelerator’s managing director explained, “In the short run, it’s totally confusing and overwhelming, but in the long run, [leaders] come out stronger and smarter.”

Facilitate Friendly Sibling Rivalry
A second key decision for accelerators is how much participants should discuss progress and challenges with their peers — i.e., other startups and project leaders currently engaged in parallel  journeys. Some accelerators encouraged startups to sprint alone to maintain focus and protect intellectual property. Others encouraged members to pace with startups in their cohort, frequently and openly sharing progress, goals, and strategies.

Sprinting alone is often assumed to help leaders maintain their focus and craft their unique competitive advantage. Consistent with this idea, several accelerators discouraged too much interaction or information sharing amongst the cohort. At these programs, startups worked in individual offices or open floorplans with buffer space that allowed for focus and privacy. Cohort-wide events were informal, providing an opportunity for founders to mingle while guarding private information. While this enhanced focus and reduced information leakage, it also deprived founders of many opportunities to learn from others currently facing similar challenges.

In contrast, we found startups did better when accelerators had them pace with startups in their cohort. That is, they facilitated friendly sibling rivalry. For example, at several of the accelerators we studied, startups attended time-consuming, cohort-wide meetings where each founder delivered their pitch, declared what they planned to accomplish during the following week to “move their company forward,” and reported progress on the prior week’s plans. An emphasis was placed on transparent disclosure, even if it might come across as bragging. One accelerator director explained: “We publicly surface progress that will put pressure on other teams to execute too.” Teams were frequently positioned so closely together that their boundaries often blurred, encouraging pacing by helping startups keep tabs on each other’s advancements. Founders described one such program as having “a lot of peer pressure.”

Facilitating friendly sibling rivalry also helps leaders recognize where they might be missing opportunities or making poor assumptions. One accelerator director explained: “People might come into the program thinking, ‘Oh, we’re so far along.’ Once they start seeing what the other people are building, they’re kind of like, ‘Oh wait, I’m not as far along as I thought.’”

Finally, facilitating friendly sibling rivalry makes it easier to know who may have successfully navigated similar challenges. Overall, while experienced mentors often provide strategic advice, peers often provide tactical information about how to execute and help leaders know how ambitiously to set near-term goals, especially around how fast they can grow.

Require Scheduled Transitions
Finally, and perhaps most counterintuitively, we found accelerators turbocharged startup growth when they mandated scheduled transitions, requiring that all teams within an accelerator participate in the same developmental and learning activities at the same time and specifying transitions between activities. The importance of schedules with fixed transitions was surprising to us, as every promising startup is somewhat unique in their market, founders, and progress. This philosophy was shared by many accelerators, which encouraged startups to flexibly tailor their learning and development programs. For example, the managing directors of one accelerator assembled over 200 opportunities for startups to attend workshops, guest speaker events, and informal networking events with mentors. Founders were then encouraged to take advantage of those opportunities on their own schedules based on their evolving needs. Unexpectedly, startups had lower growth and performance at accelerators with flexible schedules.

In contrast, startups had greater growth in accelerators that fixed learning and development schedules and required that every entrepreneur in the cohort move from one learning area to another together. The director of one accelerator said, “I break the three months into three segments: The month of June is mentor dating month…the month of July is what I call the entrepreneur’s MBA…August is really all about [learning to improve your pitch].” An entrepreneur at another accelerator said, “The first three weeks was validating your idea…The second three weeks was trying to gain traction, and then the final four weeks was seeking funding.” Overall, set schedules with fixed transitions help leaders engage in broad learning while also ensuring that learning ultimately gives way to execution — a balance critical for growth.

. . .
Our research into startup accelerators reveals three successful strategies for growth: gathering advice in intensive bursts, facilitating friendly sibling rivalry, and requiring scheduled transitions. These strategies, while forged in the fast-paced world of startups, offer broad lessons for leaders in all organizations attempting to accelerate innovation and turbocharge high-impact growth.

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Susan Cohen is an associate professor at the Terry College of Business at the University of Georgia.
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Benjamin Hallen is the Dempsey Endowed Professor in Strategy and Entrepreneurship at the Foster School of Business, University of Washington and an associate editor at the Strategic Management Journal.  
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Christopher Bingham is the Phillip Hettleman Distinguished Professor of Strategy and Entrepreneurship at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.