How startup accelerator make money? It is quite natural for you to have this question if you are planning to set up one. The US boasts of having 500+ startup accelerators, while worldwide it is over 1000. The majority of the accelerators are government-funded, university-sponsored, grants derived from institutions and rich individuals, and private funded.
How startup accelerator earns money?
Sponsorship: Operating funds are mostly availed from corporate sponsors. Such accelerators are also funded by a few local government organizations to stay connected with the community. Sponsorships are also provided by local real estate, legal, and accounting firms, especially those who may benefit immensely from startup community like by targeting them with their varied services and products.
Grants: Private & government donors provide grants without any strings attached to support entrepreneurship efforts. This in turn promotes job prospects, boosts the local economy, and attracts larger companies to make investments in the city.
Events: Startup accelerator in increasing numbers does run various types of events to support local businesses, community participants, and future entrepreneurs. Such events charge attendees some money for covering up costs, provide network opportunities, pay for marketing resources, and enable marketing. Few programs also conduct hackathons, while others run industry events at a large scale to generate money.
Rentals: Most accelerators tend to charge fees from part of the investment for providing space per seat during programs. For example, $100,000 is invested by the Startup accelerator. The startup has 3 employees & founders. In such a case, the monthly charge can be around $5000 for a 3 to 4 months period while an accelerator space. It is considered to be a co-working space domain, something opted by many accelerators these days to make money.
Research reports: These are organized by few accelerators for larger companies from the startup data derived. Syndicated research reports are purchased by companies to use them for their internal presentations. Such reports also focus on specific expertise and market domain. Companies are even reported to make $50+K payment annually for syndicate report about startups belonging to their specific interest areas.
Sales, Distribution, Marketing & Design Consulting: Few early-stage accelerators can be noticed to offer non-developers with the equivalent of ‘coding’ school. This they do by running various types of sales & marketing training programs. Here, the accelerator program employs graduates, who then act as consultants for the startups and charge a good amount of fees to render their services.
The above are few of the ways by which startup accelerator makes money to sustain.