TLDR; Accelerators prepare founders for conversations investors don’t want to have until founders have done the work accelerators don’t teach.
Over the past 6 months, I’ve been asked by two different pre-seed accelerator programs to look at what’s working and what’s not. In both cases, I see significant mismatches between what the founders need, what the market is asking for, and the structure of the program.
However, this post isn’t about picking on these specific programs, as all these accelerator programs are modeled after the same Ur-program.
The model pioneered by YCombinator twenty years ago; a dozen startup teams (2-3 founders each) relocate to San Francisco for 12 weeks. Through immersion, camaraderie, and intensity, they emerge at Demo Day with a highly polished investor pitch. The price of this experience is typically 7% of your company.
Today, some programs are no equity, some are fully remote, and some that run 6 months or a year. Today, these programs exist in every moderately sized city from Minneapolis to Boulder to Columbus to Mobile.
These programs are typically run by venture capital firms, as such they’re reliant on investors believing this model will provide outsized returns. In a low interest rate environment, from say 2009-2022, this argument was easy to make as more traditional investment vehicles weren’t providing the target returns and money is cheap. The investment argument goes something like: “We’re going to invest a little bit of your money across a wide portfolio of startup ideas. Most will fail, but one will be so wildly successful you’ll thank us. Besides, where else are you going to get your returns from?”. Thus speculative investments like pre-revenue, pre-product, pre-seed tech startups are much more attractive.
This leads us to the first modern-day problem with the current accelerator model: Demo Day.
The original idea behind Demo Day was to get a bunch of seed-stage investors in a room, have a dozen freshly polished founders pitch, and trust it leads to follow-on investment. Win-win.
Unfortunately, since 2022 fewer and fewer investors are attending Demo Days and accelerator programs have noticed. The end-of-program event has shifted from investor pitches to trade show / science fair / showcase to the general public. I’ve attended both formats from multiple accelerators – as personable as the showcase events are, I still find them anticlimactic by comparison – even if they’re more honest about the chances of follow-on funding happening immediately.
According to 2023 Census.gov numbers, 30.4M businesses in the US with zero employees – whether it be 1-person business or a partnership of 2-3 people (like would be accepted into these accelerator programs). Also in 2023, there were 13,608 VC deals nationwide, with 2,040 of those in this Angel/Pre-Seed stage.
That means, 0.0067% of these businesses secure pre-seed funding, which by delightful coincidence is the same chances as a 3+1 PowerBall win.
For one of the programs I dug into, just 6% of their founders secured follow-on investment. Better odds but still, that’s 1 startup out of every 16.5.
It’s not just investors stepping back, ‘mentors’ are as well. Mentors are the volunteer network of the accelerator programs, their implied goals is to understand the startups’ value proposition, provide introductions and connections to help the startup, and support the startup in a complimentary way to the accelerator team.
Perhaps you can already spot the mismatches;
- The accelerator program needs 12 startups to profitably run the program.
- These 12 startups need to be roughly similar in their stage, roughly aligned to the investment hypothesis sold to investors.
- The mentors may not have any subject matter expertise directly relevant to the startup team. One of the persistent founder complaints I heard in my research was how mentors’ advice just wasn’t relevant to the stage founders were at.
- Programs promise follow on investment, but depending on the startups value proposition and investor hypothesis; that may take an additional 9-12 months post program
- 30% of these companies shutter each year (“this program accelerates everything” – I still remember one managing director telling a new cohort.)
- The 1-company-to-return-the-portfolio mentality means ideas that could be very sustainable small businesses are pressured into incompatible growth trajectories.
- Today’s early-stage investors want evidence of sales and sales velocity, not just an idea.
This last point aligns with the most consistent regret I heard from founder in my research, “I didn’t talk to enough customers.”
They also admitted, part of this is; not knowing how to define their customer, not knowing how to find them once defined, and not knowing how to have that conversation once they did.
Some businesses, for example a marketing service for restaurants, you could take an afternoon and walk into restaurant after restaurant, potential customer after potential customer. Customers in other domains are more widely distributed and more difficult to identify – say a the buyer for food manufacturing supply chain automation software.
Either way, another systematic mismatch.
This doesn’t surprise me – for as we’ve already established, these programs are tuned for investor pitches. Not customer discovery or sales conversations. Some startup founders have hired me to sit in on conversations with their prospects – every single time, my first note to them is, “Why are you pitching for the first 20 minutes of a 30 minute call?”
Oh. Right. Pitch practice.
Thankfully, a different model is emerging in 2026.
One tightly focused on a specific domain, and because of this focus – ready access executive buyers clamoring for new solutions.
No need for a Demo Day.
No need for volunteer mentors unfamiliar with the domain.
No need to fill cohorts with sub-optimal teams.
Just build something these executives will buy.
