Opinion: As a mentor and investor, I think startup accelerators are failing miserably

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A successful entrepreneur is someone who passionately drums up resources and creativity to unearth new market opportunities. But the ecosystem plays an important role in fostering entrepreneurship. The ecosystem consists of many players—from the government to universities. But my interest has been in accelerators, incubators, and mentors.

Over the past two decades, I have participated in innumerable initiatives by accelerators and incubators in India. And I have angel invested in and/or mentored dozens of startups. I truly believe that entrepreneurship is the engine of our economy and needs to be facilitated as much as possible. While the excitement of creating new ventures gets me out of bed in the morning, there is a ghastly fear that keeps me awake at night.

That’s because the idea of accelerators, incubators, and mentors is great in principle, but it largely doesn’t seem to be working!

Without having to define success, I think that the success rate of startups coming out of incubators and accelerators is lower than the already abysmal rate of startup success in general. This is very distressing.

Given that most of what I do revolve around working with founders, it is embarrassing—nay humiliating—to acknowledge that the seemingly great idea of business accelerators/incubators is not yielding any fruit. Here are some scary facts in India:

• Consider the list of the top 20 to 30 startups in terms of numerical metrics (revenues, valuation, etc.). Almost none of them were ever a part of an accelerator/incubator.
• Take the case of the top two to four academic institutions (typically engineering/business schools) that have emerged as the fertile breeding grounds for the most successful startups. Paradoxically, the top startups from these institutions were never part of the business incubators in the same institutions.
• Even incubators/accelerators that have been around for years and have “processed” 50+ startups usually don’t have even one startup that has achieved impressive revenues/valuations.

But why?

Why they fail

1. The economics of accelerators and incubators are such that top mentors/professional staff cannot be afforded. This leads to paper pushers and clerical folk—however well-meaning—running the programs. And this frustrates founders.
2. Incubators/accelerators have turned into echo chambers that repeat the same inane slogans that initially excite founders but eventually just bounce off of them.
3. Cloud credits, limited time use of free shared offices, and other low-value but tangible benefits are easier to communicate than the seemingly intangible prospect of mentorship.
4. Often, the very intent of setting up an accelerator/incubator is suspect. Examples of these are academic incubators that are primarily shared office spaces, accelerators run by the lowest rung employees in a VC firm that are only seeking to expand their deal pipeline, and initiatives by tech companies that are merely distributing free credits to expand their product’s user base. If mentors, accelerators, and incubators are unable to contribute to a founder’s success, they are failures.

Why mentoring is the weakest link

Mentoring is at the core of the value that incubators and accelerators provide. But mentoring is the weakest link.

Superficial relationships

Our ecosystem has several altruistic mentors that genuinely want to help founders. But in the absence of a structured arrangement or deliverable, their relationships with their mentees tend to either remain superficial or short-lived.

Mentoring for the wrong reasons

Often, mentors turn to mentoring for all the wrong reasons. I have seen mentors try to prospect their mentees and convert them to paying customers. Others merely want to include the word “mentor” in their resume. Not much can be expected from these people.

Is all lost or is there still hope?

Here’s what works and what doesn’t

Final words

Disclaimers