In the same way that smart young people from all over flock to New England to get smarter, the region is now becoming a destination for first-time founders who come to participate in “accelerator’’ programs. They come from Philadelphia, Paris, and Tel Aviv for three-month stints, soaking up advice from more experienced entrepreneurs, honing their products or services, and eventually presenting in front of an audience of investors.
Incredibly, some accelerators are pickier than Harvard about who gets in. This year, Harvard accepted about 6 percent of applicants. TechStars Boston, an accelerator program in its fourth year, takes fewer than 1 percent of the entrepreneurs vying to get in.
The accelerators blend the long hours of a medical residency with a Cliff’s Notes MBA, along with a splash of “lean start-up’’ religion, which advises building a product quickly, testing it with customers, and then refining. Two of the most prominent accelerators, TechStars and Providence-based Betaspring will hold their concluding “demo days’’ for investors in the next two weeks. Another, MassChallenge, next month will announce the 125 or so start-ups who have been accepted. (More than 1,200 teams applied.) And three more accelerator programs hope to launch in Boston this year.
Some of the companies that have come through local accelerator programs recently have been doing pretty well. AisleBuyer, a MassChallenge alum focused on enabling consumers to use their phones to pay for products in stores, was acquired earlier this month by Intuit, the money management software company. Tracelytics, a Betaspring alum that helps companies monitor and improve the performance of Web applications, raised $5.2 million last month.
And this year’s crop seems promising, according to mentors for Betaspring and TechStars. Some of the start-ups have even raised money from investors before their program wrapped up.
This year’s Betaspring cohort includes companies like Sproutel, which is designing plush toys for children with chronic illnesses like diabetes or asthma. Sproutel’s first product, Jerry the Bear, teaches kids about ideal injection sites for insulin, and has a screen that shows how Jerry’s blood sugar level changes as a result. Movable Code, founded by veterans of Hasbro and Sony Ericsson, is developing mobile entertainment software, and RecoVend wants to help schools pool their buying power when they negotiate prices with vendors.
At TechStars, a start-up called Murfie invites you to send in your CD collection and have it digitized. Then, you can stream your music to any Web-connected computer, Android phone, or Sonos music system. Two recent Harvard grads are developing GymPact a mobile app that encourages you to keep going to the gym. When you miss your weekly goal, you pay a fine into a pool. When you hit it, you get money from the pool.
Psykosoft makes Web-based software that turns the talent-less into better artists and animators. Zagster wants to lease fleets of bicycles to universities, corporate campuses, and apartment buildings. Students, employees, and tenants would be able to send a text message to borrow one for an couple hours or a weekend, similar to the way they rent a Zipcar.
Many of these companies would have trouble raising money from individual investors or venture capital firms - especially if they were still building their product. The accelerators offer some starter funding (usually around $20,000), in exchange for a chunk of equity (usually around 6 or 7 percent). By the end of the programs, many start-ups have found early customers and are generating revenue, which make them more appealing to investors.
Can there be too many accelerators? Two new programs focused on health care-related technology, Healthbox and Rock Health, will set up shop in Boston this year, and a new accelerator for consumer electronics, Bolt, has been trying to raise money from investors.
TechStars Boston announced last week that starting this fall, it will graduate two classes of start-ups each year - doubling the number of companies it cranks out annually to about 25. (The accelerator that has the best track record of grooming high-impact companies, Y Combinator, began life in Cambridge in 2005, but now operates only in Silicon Valley. It has spawned companies like Dropbox, which helps users sync important files across many different devices, and share them with others.)
If the goal is helping people create successful businesses, says Eric Paley, accelerators are more effective than business plan competitions.
As it happens, Paley is a Cambridge venture capitalist who created a successful company called Brontes Technologies as part of the annual business plan competition at MIT. (Brontes enabled dentists to make implants more precisely, and was acquired by 3M.) But, he says, “The business plan is outmoded, a totally non-dynamic document that nobody reads any more. Accelerators force you to test your idea in the marketplace and make changes if you have to. And you almost always have to.’’
It’s natural to wonder whether too many accelerators may produce too many lightweight, easy-to-imitate Web businesses (after all, you’re not going to design an artificial kidney in three months). And also to ask whether investors will pay attention to start-ups being groomed by the eighth, ninth, or 10th accelerators that set up shop in Boston.
But accelerators are probably like colleges: Their quality will vary, as will the prospects of their graduates. And regions that want to attract talent and foster economic growth will want as many accelerators as they can get.