Republished from gan.co.

Each year, GAN asks the accelerators in our community hundreds of questions about their programs with one goal in mind—to gather concrete insights on the current state of the accelerator industry. Responses from our annual survey culminate in a giant data report that we make available to any accelerator within the community that provided us with their data.

Even though accelerators are the primary audience of this report, our findings are still incredibly relevant for several other audiences:

• Startups want to know not only what to expect when getting into an accelerator program, but also what results they’re likely to see once they’ve graduated.
• Investors want to understand how accelerators support startups worldwide, learn whether accelerated startups represent attractive investment opportunities, and identify where those opportunities may exist.
• Mentors want to know how other mentors are involved in programs, what type of help they can offer, and how accelerators are utilizing mentor support.
• And, corporate partners want to know whether startups coming out of accelerators are prepared to work with corporate innovation teams—especially in verticals related to their work.

And though we produce a portion of the report—the year’s most interesting insights—for the public to view, I wanted to share some additional insights from data we saw in the full 2021 report. (Note that all data is based on reporting at the conclusion of 2020.)

The Year in Review

Applying to Accelerators in 2021

On average, accelerators receive 576 applications for just 11.2 positions in each cohort, which means it’s still difficult to get into an accelerator program. Most accelerators continue to have application deadlines rather than rolling admissions. More programs are shifting to a “rolling” model, though, with about 22% of accelerators accepting startups throughout the year, up from 8% in 2020.

Who’s Getting Accepted into Accelerators in 2021

Accelerators are still primarily “agnostic,” meaning most accelerators (57% to be exact) take a generalist view towards what companies they accept. So, as long as you’re compelling to the program you’re applying to, you have a good chance of getting in. Still, financial services (FinTech), SaaS, data and analytics, health care, and AI are the most highly sought-after verticals. Also, B2B operating models are the most popular – 95% of accelerators seek B2B startups, while only 78% of accelerators look for B2C startups. In addition, nearly half of all programs reported that they either were looking or will be looking for later-stage companies than they had in the past. Here’s another interesting fact: 59% of all companies accepted into accelerator programs are based within 100 miles / 160 kilometers of their programs.

Three interesting insights into what gives a startup a leg-up when applying:

1. 68% percent of accepted startups already have a prototype in place. That’s no surprise, since having a prototype means that accelerators can see and feel your product before they know whether to bet on you.
2. 53% of accepted startups already have some customers, even if some of those customers aren’t yet paying.
3. 21% of accepted startups had been through another accelerator before.

Accelerator Terms in 2021

Accelerators give $53,620 in investment capital, on average, at the beginning of their program in return for a 6% stake in participating startups. Most of the time (52% to be exact), that “stake” represents equity in the company—so, as a startup, you’re giving up 6% of your stock to an accelerator to go through their program. We’re also seeing programs offer alternative methods of funding, like convertible notes and SAFEs, either in addition to equity or in lieu of it. When an accelerator offers a note, the amount given usually increases to $60K, on average, with a $1.8M cap.  And when a SAFE is offered, it’s typically $60K with a $1.9M cap. For comparison’s sake, in 2019, accelerators offered $38K across the board for a 7% stake, on average.

Program Details and Mentors in 2021

Each cohort typically lasts around 19 weeks or just under four months, up from 16 weeks in 2019. During that time, founders have access to around 124 mentors. Most mentors either spend a short amount of time (either just one day) or much longer (more than a month) actively mentoring startups. That means, if you’re a startup, you can either expect a rockstar mentor, one-day mentor, or mentors that will be with you throughout the entire program. Oh, and you’re going to want to thank the mentors you meet. Most don’t get paid for their time. They’re doing it simply because they want to help the next wave of startup teams launch their companies.

In addition to mentorship, most accelerators offer intense coaching on your sales and pitch, legal counsel, marketing, press, office/co-working spaces, and leadership coaching. Other available resources continue to grow, too. Many programs now offer benefits like design, software development, prototyping, mental health support, and talent recruitment services. Needless to say, as you’re considering applying to a program, it’s important to ask what that program offers to make sure you’ll get exactly what you need and ensure your expectations are in line with what the program promises.

In terms of staff, accelerators employ around five team members to run each program. This means that, as a startup, you’re not only getting help from mentors; you’re also getting help from a pretty large team whose sole focus is supporting your growth and building your connections.

Post-Graduation Results in 2019

Most startups decide to go on and raise a round of funding after graduating from their programs. When they do raise money, the average amount startups receive is $414K. Where is that money coming from? Primarily VCs, who make up 38% of this funding, followed by angel investors at 36%. Just 18 months ago, the tables were flipped – angels made up 47% of post-accelerator funding, followed by VCs at 32%. Unsurprisingly, 59% of all investors are located within 100 miles (160km) of the accelerators that graduate their startups.

Revenue for startups is as important, if not more, than investment capital. Of all startups that have graduated accelerators, 14% are already generating more than $1M in annual revenue. And 37% of the companies that graduated accelerators in 2020 are already generating more than $100K in annual revenue.

Only 22% of all startups coming out of accelerators in the GAN Community over the last decade have failed.

What Accelerators Are Doing Differently in 2021

Here’s a quick look at what accelerators have changed about their programs from early last year into this year.

1. They’re virtual. Before COVID, 100% of accelerators had an in-person component. During the height of COVID, only 22% had some in-person programming, and, at the end of 2020, only 33% of accelerators were doing anything in-person.
2. They’re adding a post-accelerator program. Accelerators are realizing that they can support their previous cohorts further or invite other startups that are looking to scale.
3. They’re running an accelerator for a partner. Groups like H-Farm and gener8tor are great examples of accelerators who are doing this. It’s a win-win-win in a lot of cases. Corporates get access to innovative startups without having to run a program on their own, accelerators get connected to powerful corporates that not only make them more sustainable, but also more attractive to founders, and startups get more opportunities to connect and work with strategic corporates, which are often a great source of potential revenue.
4. They’re focusing on later-stage startups. I talked about this earlier, but there’s a growing interest among accelerators to find and work with startups that are a bit further down the path in terms of their product, customers, and revenue.
5. They’re adding additional locations. They see the model working for their communities and are adding more programs as a result.

Interested in learning more? Check out the 2021 Data Infographic.