Why Startup Accelerators Are Gaining Traction & Transfiguring Emerging Markets

Startup accelerators

Accelerators and Emerging Markets

The world of business has grown a lot in the past few years. Economies are no longer centralized in a few markets and emerging markets are rapidly catching up. For a long amount of time, many obstacles have presented themselves for businesses in emerging markets to really compete with their high-income economy counterparts. Current scenarios from 2013 onwards, however, show a drastic change in the way the gap is being bridged by businesses. A major part of this credit goes to accelerator programs.

Startup accelerators are essentially places of high business growth for startups where they are provided with key resources eg. coworking, startup mentoring, etc. to scale up operations in a fast-paced manner. These programs are cohort-based, meaning that a group of a few startups go through rigorous training procedures for exceptional growth. The average startup raised $712,000 through an accelerator program allowing room for tremendous scaling trajectories.

The scenario for accelerators has changed drastically over the past few years. As of today, there are as many accelerator programs as there were startups graduating from startup accelerator programs in 2012 ~10,000.  With over 240 organizations having accelerator programs as of this day, 50% of these are now located in emerging markets all over the world. Studies have also shown that startups that got accepted into the cohort programs scaled their operations and raised more capital than those who did not get accepted.

Impact of Accelerators

Accelerators have helped transfigure the landscape of startups in the emerging markets. A special acceleration has been achieved by startups in the following areas.

  1. Revenue Acceleration: Emerging markets showed very positive revenue growth by joining hands with an accelerator. On an average, startups in emerging markets showed a revenue growth of 9.4% amounting to $15,090.
  2. Employee Growth:   The growth advantage for startups participating in accelerators was quoted to be 0.68% (significant for startups)  and employee-growth in these startups was quoted at 6.6%
  3. Rise in Equity: 5.2% of startups in accelerator programs of emerging markets experienced positive equity growth with the equity advantage amounting to $14,045.
  4. Positive Debt Growth: Startups going through the accelerator in emerging markets, reported a positive growth debt of close to $13,050 with over 7.2% ventures reporting this growth.

State of the Industry  and How Accelerators are helping

Based on several reports and confirmation through Galidata confirm the following facts:

  1. Emerging market entrepreneurs are different from high-income market businessmen. In the emerging markets, entrepreneurs are well-equipped with technical know-how and educational background but a lack of entrepreneurial experience is causing hindrances. This is where accelerators with focused mentoring help bridge the gaps.
  2. Business owners in emerging markets reported high wealth and future profit predictions as any high-income entrepreneur would, meaning they are ready to take risks, making them even more suitable to accelerate their business at lightning quick speeds.
  3. Investment funds flow relatively slower in emerging markets. This aggravates the need for startups to join accelerators in such market conditions.

The emerging market ecosystem is different, and the need for accelerators now is more evident than ever before, based on the impact they have had till now. Accelerators have changed the landscape for emerging markets and will continue to keep doing so in the future. It is slowly but surely becoming the backbone of successful and highly goal and growth-oriented startups solving real-time business and societal problems.

IA Team

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