When L.A. tech startups look around for funding and mentors, the message often has been: Go north to Silicon Valley.
But suddenly, several area entrepreneurs are starting programs to boost early stage companies and keep them here.
These programs, called accelerators, offer embryonic companies guidance and resources to help them through their first few crucial months. The concept, which has been practiced in other tech centers for the past few years, is new to Los Angeles but is launching en masse. There are at least seven accelerators now signing up participants or about to do so in the next few months – so many that some are wondering if the market is already saturated.
The goal is to help startups speed up growth during their earliest stage, a time when many companies often struggle, said Dan Dato, co-founder with Bruce Brown of Santa Monica accelerator upStart.LA, which began accepting applications over the summer for its first class of companies.
“That type of community and collaboration really helps an early stage company and entrepreneur as they try to tackle an extremely challenging process,” Dato said. “It creates the right dynamic that takes these teams of entrepreneurs and gets the results that we want, which is this acceleration of pace.”
The first class of upStart.LA will begin in January and end in April. It will give five to 10 startups access to $18,000 each, provided by the co-founders; office space in Santa Monica; and mentors and other resources such as legal services. In exchange, upStart.LA will take a 6 percent equity stake in each company. At the end of the session, the companies will pitch to investors.
Other accelerators that are accepting candidates include StartEngine in Westwood, and MuckerLab and Launchpad LA in Santa Monica.
Founder Institute, which has programs elsewhere, and K5, which will target all of Southern California, also plan to run programs in the area. Mike Jones, a Myspace veteran, has started a hybrid accelerator-investment company called Science in Santa Monica. (See sidebar.)
The accelerator is a twist on incubators, which became popular during the 1990s tech boom. Incubators such as Idealab, founded by Bill Gross in Pasadena in 1996, typically work with a company for several years until it becomes publicly traded or is acquired. At that point, the incubators get their payoff.
But accelerators mentor and provide resources to a company for a shorter, finite period of time, usually only during the earliest stage. Then the company moves out to operate on its own and the accelerator maintains equity in it.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Pace Setters
- Accelerator May Brake on Space
- SPECIAL REPORT: Seeding the Future
- Accelerator’s Full Speed Ahead on Demo Days
- Startup ‘Accelerator’ Looks to Peddle Its Mettle
- MuckerLab Startups Present at Second Demo Day
- Latest Class Presents at MuckerLab Demo Day
- Start Engine Graduates Fourth Class of Startups