A few months ago, I shared some thoughts on the accelerator strategy change at Techstars and its economic impact for regions not called New York, London, San Francisco and Berlin. This has sparked more conversation than just about any post I have written. Ever. (The lesson for me is that what I know is not what others know – hence keep writing about what I see and hear. Duh.)

Let me dig in a little deeper for those that care about growing a robust startup community and the role that an accelerator (not just a Techstars accelerator) can and should play in your city or region.

My point in that post was to debunk the fallacy that a Techstars accelerator served as an effective economic development tool. Let me be clear, the Techstars accelerators are top-notch and have a huge impact on the founders (4,000+ and counting) who are lucky to be invited in for the investment and mentorship. But, they were just one added element to mostly already mature cities.

Oh, and Techstars accelerators have an indirect spillover effect for entrepreneurship in the region that they operate.

There I said it. But, there are more than Techstars accelerators operating in just about every major city today.

To understand the role that an accelerator can play, we first must share a common definition of what makes for an accelerator. Unfortunately, the definition has widened to include any program that in some form helps new entrepreneurs (coworking as an example). For this post, I only include those accelerator programs that provide an investment (usually $25k to $120k in the form of an equity investment), have a fixed program time element (usually 3 months) and have an intense focus on mentorship.

Today there are a number of national firms that will run an accelerator program in your city (Techstars, Plug and Play, 500 Startups, and gener8tor) to name just a few. And hundreds more accelerators are one-off programs developed in city for that city (My partner Dave Neal and I ran The Startup Factory in Raleigh Durham for 4+ years).

The key is the equity investment piece. That is the one element that separates the real accelerators from those riding on the “accelerator” name train. For the best of the best entrepreneurs who see an accelerator as a key contributor to their entrepreneurial journey, they want that capital.

And therein lies the little hook that changes everything for economic development folks focusing on increasing entrepreneurship in their region. Investment capital. To be true to the accelerator investors, accelerator operators should be choosing companies that have the best chance of succeeding regardless of where they operate today or tomorrow.

You can do the math yourself now. Economic development or those with a focus on growing their city or region should only want to help the entrepreneurs in their city or region. That is the problem with an accelerator serving as an economic development tool. These seemingly nuanced goals are actually a big deal.

So, what does this mean for those who only care about their city or region? Should you invest, stand up, or support an accelerator in your city/region? The answer is complicated:

  • If you are itching to bring in one of the national brands, have your eyes wide open regarding who and how they choose the startups. Some will restrict their startup pool to just your region. Others will not. Some make investment decisions from a team outside your city or region (which means they really don’t know your startups).
  • If they will only choose local, then again, have your eyes wide open and be realistic about these investments and their future. The startups are the best in your region. Understand that this means many more will fail vs succeed. It really is a numbers game. And do not compare your accelerator with other accelerator programs that do not restrict where the startups come from. Yes startups need capital but capital is not the only driver of their success.  More capital does not mean more or better startups.

As I wrote in my latest book, Build The Fort: The Startup Community Builder’s Field Guide, growing your startup community and entrepreneurial ecosystem is a complex process. There are many elements to growth and they all work differently in different regions. But there is never “the one thing” you must have to really propel your region forward. Like an accelerator.