Global software-as-a-service (SaaS) platform Gust today released the Global Accelerator Report 2016, which revealed the state of the accelerator industry in five regions.
A total of US$206.7 million has been invested in 11,305 startups by 579 accelerator programmes around the world in 2016, with US$17.5 million being invested in 1,368 startups by 76 accelerators in the Asia & Oceania region.
Compared to the numbers in the US & Canada (3,269 startups) and Europe (3,701 startups), Asia & Oceania remained behind though it still fared better than Middle East & Africa (1,172 startups).
Of all Asian countries, India is the only one to make it in the top 10 list of countries with the biggest investment value and the number of startups accelerated.
Malaysia-based MaGIC Global Accelerator Program (GAP) is also the only Southeast Asian accelerator to be named in the top 20 most active accelerators list, based on the number of startups accelerated in 2016.
The report also revealed that while 73 per cent of accelerators in Asia & Oceania described itself as a for-profit organisation, the number of accelerator which monetises through startup exits has declined from 63 per cent in 2015 to 42 per cent in 2016.
At the other hand, the number of accelerators which are using “alternative” monetisations sources has increased from 56 per cent in 2015 to 85 per cent in 2016.
The report named charging for mentorship, subletting office space, hosting events, and working with corporations as some of the alternative methods that accelerators have been using to make money.
Another notable fact about the Asia & Oceania region is the use of cash as investment (65 per cent), which was only beaten by the Latin America region (76 per cent).
Similar to Latin America and US & Canada, 66 per cent of accelerators in Asia & Oceania take equity from participating companies. On a global average, the majority of those who take equity from participating companies take between four to six per cent.
The report also identified four major trends in the global accelerator industry.
Apart from verticalisation (accelerators are increasingly more focussed on particular verticals), global expansion, and blurred lines (between accelerators, incubators, and early-stage funds), a notable trend is the growing ties between accelerators and corporations.
On a global scale, 52.1 per cent of accelerators are at least partially funded by a corporation, and 67.2 per cent aim to generate future revenue from services sold to corporations.
“… This is because corporations are discovering that accelerators are an efficient and effective way to engage with startups. On the other hand, accelerators understand that corporations can help them fund operations in the short-to-medium term (exits are often far out). They improve the prospects of their portfolio companies that can potentially sell to, raise funds from, or be acquired by these corporations,” explained the report co-author Miklos Grof.
Fintech will continue to become a popular vertical for accelerators to invest in the next 12 months, followed by internet-of-things (53.31 per cent), big data analytics (51.74 per cent), and software-as-a-service (49.30 per cent). Sectors such as real estate was in the bottom position of these popular sectors at only 18.82 per cent.
Another trend that is worth noting is that industry players believed that the accelerator industry is entering the consolidation era.
“There will be a few top tier general programmes and a lot of niche, verticalised industry-focused programs. Every other programme in between will just shut down,” said Marvin Liao of 500 Startups in the report.
Bill Liao of SOSV also shared a similar opinion.
“Winners will be those who attract top talent and de-risk it successfully … The key transformation will be the realisation of just how difficult it is to make any one accelerator a success, and capital will become concentrated in the experienced few accelerators that maintain successful year-by-year track records,” he said.
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