Inside the world of fintech incubators and accelerators

Although there are thousands of accelerators globally, the most prestigious still seems to be Y Combinator. The Silicon Valley-based program was founded in 2005 and invests US$500,000 in a large number of startups across two separate cohorts each year. It has invested in high-profile businesses such as Stripe, Coinbase and Airbnb. Between them, alumni of the program have achieved a combined valuation of over $300 billion.

Uses the power of accelerators for good

For growth-stage startups, accelerators can be an incredibly useful tool to help them scale. And even better, accelerators are also increasingly being used to drive positive change across the financial sector.

In partnership with Lloyds Bank, Foundervine is a UK-based program that combines events and networking with a number of accelerators. The goal is to create “an equitable landscape” for black and other underrepresented founders. It was created in response to the ‘Black, British, In Business & Proud’ report, published by Lloyds in conjunction with the Black Business Network, which found that only 43% of black business owners trust banks to have their best interests at heart.

There are programs for other underrepresented groups as well. StartOut Growth is a US startup accelerator for companies with LGBTQIA+ entrepreneurs, while The Female Innovators Lab is a partnership between Barclays and Anthemis that aims to support female founders at the idea stage of their business journey. Accelerators like these will hopefully have a positive impact on diversity in fintech. According to a new report published jointly by EY and Innovate Finance, there is still a gap between male-led and female-led businesses when it comes to access to finance, and the gap is having an effect on the number of women-led companies. reach the scale-up stage.

Is an incubator or accelerator program right for me?

The decision whether to apply for an incubator program is a personal one. Startups and entrepreneurs will always have different approaches to growth, and for some, accelerators will not be the right answer.

“If I filled out every application form and accepted every invitation, there’s no way our business would exist,” says Liam Chennells, founder and CEO of KYB compliance fintech Detected. “Instead, I’ve spent that time building a board and investor base that supports me as well as the needs of Detected. I’ve raised money without having to pitch in front of 40 other startups. I’ve considered who I want to invest in the company and approached them with a well-considered summary of the opportunity and quickly turned it in or out. I might have been more easily connected to more investors if I had been part of an incubator, but lots of connections doesn’t necessarily mean lots of capital – it’s about more about engaging with the right people.”

However, he says incubators are still the right approach for some entrepreneurs – especially if you don’t have a sales background or you don’t have a “black book” of contacts to take with you. Liudas Kanapienis, co-founder and CEO of KYC compliance company Ondato, agrees that accelerators can have a lasting impact.

“We joined Startup Wise Guys’ Fintech 3 program,” says Kanapienis. “The experience was positive and certainly the right move for us at the time. Our goal in looking for acceleration was not only to get help to grow faster, but also to be better equipped to do so long-term and sustainably.

“What we found attractive about SWG is their hands-on approach to helping early-stage startups get off the ground. The acceleration was a good way to pick up some of the necessary skills along the way faster and learn from the mistakes others have already made. Some of the areas that benefited most include hiring, fundraising, and early stage accounting. They also leveraged their network to help us find funding, people, and other resources. And we leveraged the SWG brand to convey an element of trust that investors look for in later stages .”