“Startup accelerators support early-stage, growth-driven companies through education, mentorship, and financing…The accelerator experience is a process of intense, rapid, and immersive education aimed at accelerating the life cycle of young innovative companies, compressing years’ worth of learning-by-doing into just a few months.”
– Harvard Business Review, “What Startup Accelerators Really Do”
In the simplest terms, an accelerator’s primary goal is to propel startups forward at a pace that exceeds what they would otherwise be able to achieve on their own. Traditionally, accelerators provide support via an immersive and practical education experience. In addition, accelerators can support startups through financial means.
According to the Harvard Business Review, accelerators are bringing measurable results to startups. These trends are also evident in Africa, where the startup economy continues to expand across the continent.
In addition, African tech startups have bucked the notion that foreign investment is slowing around the globe. One example of this is the increasing investments made by global accelerators in African startups. From San Francisco to Hong Kong, international accelerators are taking notice of the unique opportunities provided by African tech startups and making sizeable investments.
This article looks at four such global accelerators that are making an impact on Africa’s economy. These organizations are helping many innovative African startups take their operations to scale.
Based in Silicon Valley with offices in Mexico City and San Francisco, 500 Startups has invested in over 1,500 companies from more than 50 different countries. In addition to its accelerator program, 500 Startups also provides seed capital and Series A funding to startups in amounts ranging from $50,000 to $500,000. The company holds nearly $200 million in assets.
Of course, the company’s accelerator program has also received recognition. Spanning a period of four months, the program provides $100,000 in funding in exchange for a 5% stake in the company. Many startups compete to participate in the accelerator program, which accepts around 2 percent of applicants. The program also includes mentoring, hands-on education, and designated office space for collaboration and work.
African startups accepted into the program have included Sweepsouth (South Africa), Kudobuzz (Ghana), Podozi (Nigeria), and other startups based in Kenya and Egypt. The company is also helping to support Ghana-based startups by hosting a $1 million entrepreneurial boot camp in the country.
Nest is a venture capital (VC) firm based in Hong Kong. More specifically, the company is an early stage VC firm that specializes in startups within the financial technology, health technology, and urban technology spheres. The company is relatively new to the African startup scene, and its accelerator model is a bit different: it runs accelerators on behalf of large corporations and other entities.
Accelerators are 12 weeks in length and are designed to “support the needs of high potential and fast-growth startups” with a focus on enabling entrepreneurs to quickly take their businesses to scale. Nest is supported by IBM to execute a variety of accelerators for startups.
African companies that have benefitted from Nest’s accelerator model include SuperFluid (Kenya) and Creditable (South Africa). The company is looking to include more Africa startups within its Asia-based programs.
Named “The Best Startup Accelerator of 2014,” Startupbootcamp comprises 15 different accelerator programs focusing on 15 different industries, such as fintech, energy and smart transport, e-commerce, digital health, the Internet of Things (IoT), and others. One of the best-known accelerators within the startup community, Startupbootcamp hosts accelerator programs from Mumbai to Miami.
It too has been impressed by the progress made by African startups.
As a result, the company has invested in the Tanzanian startup BimaAfya—a mobile “micro-health” insurance product. The company has ramped up operations on the continent and has held several mini boot camps in South Africa as well.
Startupbootcamp’s accelerator programs focus heavily on practical knowledge and education via mentorship. The company maintains a wide mentor network, offering entrepreneurs the opportunity to connect with more than 100 investors, mentors, and potential business partners during the three-month program.
Techstars launched in the United States in 2006. Today, the organization is viewed by many as the standard for accelerators.
Techstars has invested in over 750 companies, of which 90 percent are still in business or have been sold. The company has poured more than $2 billion into startups and has a market capitalization that exceeds $5 billion.
Its accelerator program involves a three-month mentorship that offers “hands-on guidance and support throughout the entire program and beyond.” Techstars offers a mentor network that encompasses more than 3,500 business executives across numerous industries.
Less than one percent of applicants who apply for a Techstars accelerator are accepted, making it one of the most selective accelerator programs out there. The African startup that set the bar was Kenya’s Bamba Group—a company that provides SMS communications services as well as data collection and analysis for market research.
On the African continent, Techstars partnered with Barclays Bank, agreeing to run the banking behemoth’s accelerator program in Cape Town, South Africa.