According to a report [PDF] by the Kauffman Index, the United States reversed a downward trend in startup activity in 2015. That year, the rate of new entrepreneurs shot up roughly 10 percent and the number of startups founded made the biggest year-over-year increase in two decades.
What's behind the rise of startup activity? One factor might be the increase in accelerators around the country. Back in 2006, there were only a handful of US accelerators, according to a report by the Brookings Institution. But in 2014, that number jumped to 170. The report notes between 2005 and 2015, accelerators invested in roughly 5,000 startups, with an average investment of $100,000 per company. Those startups went on to raise a total of $15.5 billion in funding during the same timeframe. Yowza!
When you look at the numbers, it's easy to see how accelerators help small tech businesses get funded, but there are other benefits, too. Accelerators typically connect program participants with experienced mentors, who are able to provide guidance, offer advice, and hopefully help them avoid the steep learning curve of starting and running a business on their own.
Below, we feature some of the accelerators that help small IT business owners find their footing in cities that aren't usually considered tech hubs. For more on tech hotspots outside San Francisco and Manhattan, stay tuned for our upcoming report, "The Best Places to Live for Tech Entrepreneurs."
Emerging Technology Centers in Baltimore, Maryland
The Emerging Technology Centers (@etcbaltimore) (ETC) in Baltimore serves as the umbrella organization for several tech initiatives, including Incubate Baltimore (an incubator), BeeHive Baltimore (a co-working community), and Accelerate Baltimore (@AccelerateBmore) (an accelerator).
"We do an application process where we choose six companies and give them $25,000 and deliver four month of a hands-on program," says Deborah Tillett, president and executive director of ETC. "Then they launch a viable project. They also get two more months of staying at the incubator for free."
Accelerate Baltimore was the first accelerator launched in Charm City. In six years, the program has…
- Invested $800,000 in participating companies.
- Graduated 28 businesses, 68 percent of which had women or minority founders.
- Raised $11.9 million in outside funding.
"We have an 82 percent success rate collective cohort through 2016," says Tillett. "Last year, we said to ourselves, after Accelerate Baltimore, companies spend the next two years trying to raise money. So we asked for another $100,000, and now award it to one of the lucky companies."
When asked if it's easy to make business connections in Baltimore, Tillett responded that it doesn't take much effort to find somebody who knows the person you're looking to meet.
"One key thing to remember about Baltimore is it's the biggest small city, or the smallest big city, you'll ever encounter," says Tillett. "I believe that you're one degree of separation from anyone need to know in Baltimore."
Accelerate Baltimore's program only runs once a year. If you're based in Baltimore and want to apply to be in their next cohort, the application deadline is December 1, 2016.
NMotion in Lincoln, Nebraska
NMotion is an accelerator in Lincoln focused on technology-based businesses and high-growth software in:
- Finance / insurance.
- Human resources.
So how does it work?
"About four years ago, I founded NMotion, which is a start-up accelerator program," says Brian Ardinger (@ardinger), managing director of NMotion. "We look to invest in five to 10 new software technology companies every year and we put them through a 90-day boot camp and immerse them in the community. We connect them with mentors and support staff and help them go from the two lonely people in the garage trying to figure things out all by themselves to the next stage."
Businesses who participate in the accelerator program receive access to free co-working facilities and discounted services. NMotion also facilitates $20,000 in seed money funding though an angel investor network and Invest Nebraska (@InvestNebraska).
Another perk of starting a business in Nebraska? According to Nerd Wallet, Lincoln is the third-best city in the United States for young entrepreneurs, thanks to its highest per-capita rate of small business loans and its low cost of living.
"We've begun to put the foundational things in place that allow people to raise their hand and say, 'I want to be entrepreneur,' and they're not looked at like they're crazy," says Ardinger. "That's everything from educational opportunities to understand what it means to be an entrepreneur to connecting founders with other founders so that they have a support system of folks to finding funding sources. I think Lincoln is a great place [for startups] because it’s a welcoming community, the costs are low, and you can test and experiment and build without taking as much risk as other places. You now have role models and funding sources that weren't there maybe 15 or 20 years ago."
Applications are closed for the accelerator program for 2016, but budding entrepreneurs are encouraged to check out NMotion's Prelaunch program, which accepts new members monthly.
Techstars Mobility and TechTown Detroit in Detroit, Michigan
As manufacturing jobs have disappeared from Detroit, city leaders had to look elsewhere for job creation. That's why they've been encouraging the rise of tech and accelerators that help entrepreneurs find their footing while launching a new business.
One of these programs is Techstars Mobility (@techstars), which combines tech and transportation – a perfect fit for the Motor City.
"Techstars Mobility is a seed-stage accelerator that invests in 10 to 12 mobility-related startups each year right from downtown Detroit," says Ted Serbinski (@tedserbinski), managing director of Techstars Mobility. "The way we are making those investments is working together with a consortium of eight automotive partners. The mission is really to connect the automotive and startup world by breaking down silos and building those partnerships. So far, we have over 300 people from 50 different automotive organizations supporting the startups and mentoring."
Another entity helping to grow Detroit startups is TechTown Detroit (@techtowndetroit), which has three programs, including Labs and its 12-week Venture Accelerator. After graduating, business owners are invited to join the incubator program.
"The Labs program is focused on helping early-stage technology-focused businesses," says Gerry Roston, executive in residence of TechTown Detroit. "We have an accelerator program that's your traditional cohort-space accelerator for early-stage businesses. We also have an incubation program where the executives in residence, like myself, work very closely with a limited number of businesses. There are really no set rules about that. We work with them to figure out where they are and where they need to go, identify milestones to help them get there, and then help them achieve those milestones."
So why is Detroit a good city for tech entrepreneurs to put down roots?
"Detroit has rich culture of entrepreneurship," says Serbinski. "It was one of the top cities in the world back in its height in the 1950s, and we are seeing this massive resurgence in Detroit right now. It's an iconic city and there's a lot of amazing technology here from the automotive sector and manufacturing."
Roston adds, "Detroit is going through a revitalization, renaissance, and rejuvenation. It's exciting to be a part of that. Another thing that makes it attractive is just the cost of doing business here. It's significantly lower than on the coast, so the cost for houses, office rent, salaries, legal services, and accounting services is significantly cheaper. In a startup, cash flow is king, so if you can spend less money to get the same thing done, you are that much further ahead."
TechTown Detroit is not currently accepting applications, but you can send an email to [email protected] for more information. Techstars Mobility has concluded its 2016 accelerator program. The dates are not yet posted for the 2017 class, but in 2016 applications opened in early January, so stay tuned!
About the Contributors
Brian Ardinger is the founder of NMotion, a seed-stage startup accelerator; co-founder of Econic, a consulting firm that helps organizations accelerate growth through startup-driven innovation; and producer of the Inside Outside Innovation podcast. Brian was CMO at Nanonation, working with clients that included Pepsi, Target, Nike, Harley-Davidson, and Royal Caribbean. He built the consulting arm in Asia for Gartner and also led the customer experience lab at Ion Global, a Hong Kong technology firm.
Gerry Roston serves as the CEO of Civionics, a University of Michigan startup that delivers an advanced Industrial Internet-of-Things (IIoT) solution to manufacturers to help them minimize downtime. He is also an executive in residence at TechTown Detroit, where he helps entrepreneurs transition their ideas into sustainable businesses. During the course of his career, he has successfully managed startup businesses and teams within publicly traded companies; pursued investment opportunities; and brought new products, ranging from nano-scaled materials to diesel-electric locomotives, to the market.
Ted Serbinski is an entrepreneur and early stage investor operating at the intersection of Detroit's automotive dominance and its entrepreneurial resurgence. He is the managing director of Techstars Mobility, the first US startup accelerator program focused on next-generation mobility technologies. Ted also serves as the chairman of the Techweek Detroit Executive Advisory Board, board member for the Michigan Venture Capital Association, and board member for TechTown. He's also the executive producer of the documentary Restarting the Motor City.
Deborah Tillett is the president and executive director of Emerging Technology Centers (ETC). She is responsible for management and oversight of the City of Baltimore’s Technology and Innovation Center. In that role, she provides the guidance; leadership; and resources necessary for entrepreneurs to start, grow, and succeed with their businesses. Prior to joining ETC, Ms. Tillett served as president and co-founder of Immersive 3D, LLC, an education technology startup. She was named the 2004, 2012, and 2016 Innovator of the Year by The Daily Record, received the 2005 and 2016 Brava Award from Smart Woman Magazine, and was named one of the 100 Most Influential Women in Computer Gaming in 2006.