Kris Duggan: Startup Accelerators Still Work — Here’s Why

 Startup accelerators like Y Combinator and Alchemist Accelerator helped drive last decade’s SaaS boom.

They faded into the background a bit during the early 2020s, when “zero interest rate policy” in the United States and some other major markets drove what Y Combinator’s Dalton Caldwell and Michael Seibel say was “an explosion of unicorns [and] a surge of new investors” that changed how founders approach fundraising and business development (not necessarily in a good way).

Now that interest rates are higher and tech investors are increasingly selective about the companies and sectors they support, startup accelerators are back in the conversation. Indeed, serial entrepreneurs and investors like Kris Duggan — who has advised Alchemist Accelerator — say they’re more important than ever.

“Accelerators offer an incredible array of benefits, from access to seasoned advisors, unparalleled network effects and a potentially game-changing credibility boost,” Duggan says.

Some remain skeptical. They argue that with rapid improvements in AI and structural changes in startup capital formation, accelerators are less important than they were five or 10 years ago. Their arguments are worth engaging, but experts like Duggan believe they’re wrong. Here’s why.

Startups Can Now Do More With Less

Let’s acknowledge the elephant in the room right away. Yes, startups scaling in 2025 can get much farther with the same amount of resources than startups scaling in 2015, thanks to better software tools and AI.

Microsoft explicitly cited AI in announcing a plan to cut 9,000 jobs in July (about 4% of its workforce) after cutting thousands more earlier in the year. Were Microsoft getting off the ground today, it likely never would have hired many of the middle managers and sales reps it let go this year.

But today’s more productive startups actually stand to benefit more from participating in an accelerator than their predecessors, which may have gotten too bloated, too quickly. Accelerators prefer to work with smaller, more nimble teams; AI makes it easier to maintain that posture until your startup is at the point where it’s “ready” to get more from the experience.

Tech Is Changing Faster Than Ever

The flip side of the “better AI and software” coin is that even truly gifted founders find it hard to keep up with the bleeding edge these days. Things are moving really fast right now, and you’re more likely to keep up in the immersive, nurturing environment of an accelerator than totally exposed to the whims of the market.

Expertise Is Still an Edge

One reason accelerator participants tend to do better in dynamic business environments is their access to expertise. For all the promise of AI, old-fashioned, domain-specific human insight remains a critical edge for businesses of every size, says tech investor and sales specialist Amer Attar.

For example, financial expertise is an important asset for early-stage companies, whether internal or external, Attar says.

“Discipline in managing expenses is crucial in the early stages, where cash burn can determine whether a startup makes it to its next funding round,” he says. In an accelerator, you’ll have access to seasoned CFO and CRO types who can set you on a fiscally sustainable path better than your less experienced cofounders.

Accelerators Let You “Fail” Without Failing

Startups that successfully graduate from an accelerator are more likely than their peers to achieve a successful exit for their founders (or reach the founders’ long-term revenue or scale goals, if they’re in it for the long term).

One reason for this is that accelerators are fantastic at teaching founders what not to do. They lead participants up to the edge, invite them to stare into the abyss, and warn them to avoid the mistakes that could cause a slip.

The Network Effects Are Impeccable

A startup joining a prestigious accelerator like Y Combinator or Alchemist Accelerator is not unlike a gifted high schooler from a modest background matriculating at Harvard or Stanford. The education is first-rate, but the network effects aren’t to be overlooked either.

It’s difficult to predict exactly what said network effects will mean for your startup. It depends on who you meet and what sorts of connections you forge. But it’s likely that you’ll encounter people you wouldn’t have met otherwise who will soon be in a position to advise, fund or even join your enterprise.

Accelerator Graduates Earn Valuable Cred

Another difficult-to-quantify benefit of participating in a startup accelerator is the credibility you’ll enjoy as a graduate. More so than the famed Y Combinator “deal” available to every cohort member (a $500,000 investment in exchange for 7% of company equity) is the prestige of being a Y Combinator cohort member.

Which is more important? Probably the prestige, if we’re being honest.

It’s a Font of Inspiration

This one is also difficult to quantify and not to be overlooked. Provided you’re receptive to feedback and paying close attention to what your advisors and peers say and do, you’ll extract an immense amount of useful information from your accelerator experience. It’s possible, if not probable, that you’ll have a “light bulb moment” — a flash of inspiration that sends you and your company off in an unanticipated and fruitful new direction.

Strike While the Iron Is Hot?

This is a pretty impressive list of arguments in favor of joining a startup accelerator. If you’ve been on the fence so far — not sure whether it’s worth going through the trouble of applying or committing months of your life (and your team’s) after getting in — perhaps you can find a compelling reason to make your move.

After all, the saying “It’s never too late” isn’t relevant to participating in a startup accelerator. For one reason or another, there will come a time when it’s too late for your company.

That’s another argument in favor of joining now. For striking while the iron is hot, as they say. Because while it’s true that your startup’s success might not entirely depend on its membership in an accelerator cohort, you’re very unlikely to regret your decision to move ahead.