Getting Started: Accelerator First

Short Description:
- Some venture funds start as vehicles to invest in the participants or graduates of an accelerator program. First, an accelerator program establishes a reputation or track record of quality companies participating and then the managers raise a fund to invest in those companies.
Benefits:
- Provides a lower-cost way of getting started
- Can demonstrate investment judgment and deal flow to LPs without having a previous fund
- Depending on the number and quality of accelerators in a sector and/or geography, the accelerator program can be a good way to create differentiated deal flow and attract attention from founders.
Trade-offs:
- From the perspective of a GP who may want primarily to make venture investments, having to start an accelerator first may be extra work and take longer than desirable.
- Some people would be good at running a fund but not necessarily good at running an accelerator.
Examples:
- YCombinator
- Alchemist
- Queen City Fintech