Top 6 Reasons for International Startups to Join a US Accelerator
Many international startups dream of joining a US startup accelerator. But while a top US accelerator like Y Combinator or Techstars can offer many opportunities to startups, it’s important to remember that an invitation to join is not a golden ticket. That said, there are many advantages of participating in a US accelerator program.
In a future article we’ll consider cases when your international startup shouldn’t join a US accelerator. But today, let’s look at the top six good reasons for an international startup to join an accelerator in the United States.
1. Access to the US market
The combined European market is nearly equivalent in size to the US market, but there’s a key difference: it’s much harder to target the entire European market all at once. While the EU simplifies cross-border business, you still have to localize websites, marketing campaigns, and product offerings for many distinct regions and language groups. Breaking into the US market lets you target over 300 million people in a huge geographic area (mostly) in one language. In short, this makes it much easier for startups to quickly build a critical user base.
The typical US approach to startups has been described as growth-first, compared to a revenue-first approach in Europe. This stems from different levels of risk aversion, but also has a lot to do with the markets we’ve just described. It’s easier for startups to grow really quickly in the large US market, but at the same time the critical mass that a startup needs to succeed in the US is higher. Depending on your particular product or service, the US market may offer the best opportunity to go big.
“We think the most important market for our business – because of the nature of our business – is in the US. So we said if we want to do it, then we have to do it in the US – otherwise it doesn’t make sense.” – Nikolay Piriankov, CEO of Rare Pink (Boston Techstars 2016)
For Rare Pink, an online seller of custom engagement rings, the US market offers them the greatest growth potential. So when Rare Pink looked for an accelerator to join, it made sense to go to the US. Clearly, startups can target the US market from abroad – but it’s harder to succeed in the American market that way.
2. Investors & venture capital
The US is home to more angel investors and venture capital than can be found in Europe (or the rest of the world). The difference is even greater when it comes to late-stage funding options. Europe is the launching ground for many successful startups, but typically these companies move stateside after achieving some initial success. The main reason? Funding. To truly go big, startups need access to VC funding that can be found in the US much more easily than in Europe.
As Eveline Buchatskiy, Director at Techstars Boston, puts it: “No other region in the world has the amount of ‘smart’ capital that you can find in the US.” And there’s no better way to find that capital and get in front of VCs than to take part in a top US startup accelerator.
But investment benefits that stem from joining a US accelerator can extend even outside of the states. Mauro Repacci, Co-Founder and CEO of Navut (Boston Techstars 2016), a company that helps buyers and renters find a home in their ideal neighborhood, says that there has been additional interest in his company back home in Canada thanks to their participation in a US accelerator: “Now we’re talking to Canadian VCs and they’re more interested, because they’re afraid that we’re going to get better deals here. It’s a competitive place.” Other international startups may also notice more VC interest back home after graduating for a US accelerator.
3. Expertise of top US accelerators
“Why the US? First of all, the US accelerators have a better reputation. They have more years behind them, so I feel like they’ve ironed things out.” – Nikolay Piriankov, CEO of Rare Pink (Boston Techstars 2016)
Y-Combinator was the first startup accelerator in the US, and was launched in 2005 in California. Techstars began shortly after in 2006, originally launching in Boulder, CO. At just over a decade old, startup accelerators as a concept are still coming into their own. And as can be expected in any new industry or market, some players have great expertise and impressive track records while others lag behind.
Not all startup accelerators are equally successful, but the top US accelerators are the best in the world. Ian Hathaway of the Brookings Institution summarizes the latest research on startup accelerators as follows:
…accelerators can have a positive effect on the performance of the startups they work with, even compared with other key early-stage investors, such as leading angel investment groups. However, this finding is not universal. So far, positive effects have been only attributed to leading accelerators. Outside of those, the impact of participation in an accelerator may be ambiguous—or perhaps even negative.
Top US accelerators do appear to help startups get a step ahead. But if you’re going to join a startup accelerator, then it better be one of the best in the world – especially considering that participation in a poorly run accelerator program may even have a negative impact on your startup! Since the best accelerators on the globe are currently in the US, there’s a strong argument for considering a respected US accelerator no matter where your startup is from.
“Our first concern was quality. We didn’t apply to any other accelerator except for Techstars because we were looking to the best accelerator here in the US.” – Mauro Repacci, Co-Founder and CEO of Navut (Boston Techstars 2016)
4. Networking opportunities
Moving to a new city always presents new opportunities. As an international company you’re already connected to the startup community in your home city (or entire country), so why not go somewhere different where you can develop an entirely new network?
Mauro Repacci reminds us that going to an accelerator in a new city can help you grow your network much more effectively than you could in your hometown. In his words, “Network-wise we wouldn’t have leveraged an accelerator [in Germany] in such a way that we’re doing now in the US.”
Nikolay Piriankov, whose London-based startup participated in Boston Techstars 2016, also shares Repacci’s view:
“I wouldn’t join an accelerator in a city where I am, because I probably have the ability to get an introduction to anyone there already… I’m a person who likes to develop a network. If I went to a London accelerator I would still get an amazing network. But here I’m creating a new, raw network… and that connects to all kinds of things.”
New business networks are always a good thing, but it’s also important to consider why you need a network in a particular city. Repacci’s company Navut introduced their home-finding service in Boston, and Piriankov’s company Rare Pink is entering the US market and has established an office in Massachusetts. Be sure to pick a city that is strategic for your startup.
5. Top talent
In the US startup community it’s easy to find people who have “been there, done that” – in the words of Eveline Buchatskiy, Director at Techstars Boston.
Startup accelerators tend to base themselves in cities with large pools of tech and business talent. These are typically cities with well-ranked universities. And introducing a startup accelerator to these cities or regions attracts even more skilled people to these areas. Going to a top US accelerator puts you in the same place as a lot of other highly qualified professionals, which is terribly important when you’re looking to hire.
Many startups hire during their time in a startup accelerator, and when they do they’re looking for top local talent. Having a respected accelerator’s brand attached to your name can attract highly qualified employees, and an accelerator’s local university and business networks can source candidates that an international startup would otherwise have difficulty recruiting.
6. Track record of successful tech startups
The US has produced quite a few successful tech startups over the past decade. Though many startups do fail, in US accelerators it’s easy to find people who know how to succeed from firsthand experience. AirBnB, Dropbox, Stripe, Instacart, Twitch, Mixpanel, Reddit, Weebly — all of these startups graduated from Y Combinator. Localytics, Ginger.io, PillPack, Contently and many other successful startups went through Techstars.
Also, since the oldest accelerators are located in the US, it’s easier to assess their track records. When a startup is in its first or second year it’s hard to say much about whether or not they truly help companies succeed in the long run.
Is a US Accelerator Right For Your Startup?
We’ve highlighted six solid reasons to choose a US startup accelerator:
- To gain access to the US market
- To find investors and venture capital
- To benefit from the expertise of top US accelerators, some of which have a decade of experience
- To build a new strategic business network
- To locate top talent in US tech hubs
- Because US accelerators have already produced many successful startups!
But is a US accelerator the right choice for your startup? To weigh the pros and cons, start by understanding your own business goals. Are you looking for venture capital? Do you want to grow rapidly or bust, or are you more interested in slow, steady growth over time (the stereotypically more European approach)? Once you understand what you want for your company, then ask what you want to get out of an accelerator.
You don’t have to join a US accelerator – or any accelerator, for that matter – to be a successful startup. In fact, there are certain scenarios in which it’s probably best not to join a US accelerator. We’ll consider those scenarios in a future article.