The well-advertised boom in startups and venture capital in recent years has coincided with the emergence of new players in startup ecosystems. One of these, startup accelerators, has received a great deal of attention but also little scrutiny. Moreover, they are commonly misunderstood or mistakenly lumped in with other institutions supporting early-stage startups, such as incubators, angel investors, and early-stage venture capitalists.

In a recent analysis published by the Brookings Institution, I tackle some of the confusion around startup accelerators by laying out a clearer picture of what they do, and how they differ from other early-stage institutions. I also provide a review of the research literature on the effectiveness of accelerators to achieve their stated aims, some best practices for accelerator programs, and some figures on the size, scope, and impact of these organizations in the United States.

Accelerators are playing an increasing role in startup communities throughout the United States and beyond. Early evidence demonstrates the significant potential of accelerators to improve startups’ outcomes, and for these benefits to spill over into the broader startup community. However, the measurable impact accelerators have on performance varies widely among programs .not all accelerators are created equally. Quality matters.

A startup accelerator is a short-term growth program that promotes a few years of growth in the span of a few months. Think of them as a boot camp in market-readiness and investment development. Studies show graduates from top-rated accelerator programs reached key milestones sooner. There are several benefits of a startup accelerator, including:

Seed funding: Most programs offer their companies seed investments. According to recent data, the average accelerator equity deal was $38,000 in 2018. So, how do startup accelerators make money? Participants exchange these investments for a percentage of their equity.

Coworking and private work time: It’s no secret hard work and dedication drive success. Accelerators give you lots of independent work time. These programs often provide coworking space or private offices for this purpose.

Training: Many accelerator programs offer access to one-of-a-kind training opportunities. These come first from formal mentorship programs. These advisors are successful founders, investors, and experts in growing businesses. Throughout an accelerator, companies will take part in seminars, workshops, mentor meetings and pitch practices.

Networking: Accelerator programs rely on cohorts. So, over several months, startups get to meet others in the early stages of development. They exchange ideas with fellow innovators that can drive future success and partnerships. Accepted startups also get to work with founders of successful companies and access to an alumni network.

Demo day: The program culminates in a pitch day. After scaling their companies, each team gets to pitch their startup to potential investors.