Accelerators boost prospects of tech start-ups

Los Angeles: Tim Sae Koo had an idea for a tech start-up, but the first-time entrepreneur had no idea what to do next. In January, he joined the inaugural class of tech accelerator StartEngine, hoping to turn his vision for Hypemarks — a website at which users create collections of their favourite links — into a bona fide business.

Within three months, Koo launched the website, and is now talking to a local investor about a substantial investment in the company.

"I learned more in the past three months than I did in the past 3 1/2 years at USC," Sae Koo, 21, said. "Going into it, I expected to basically accelerate the business 90 miles per hour. Looking back, that's exactly what happened."

Tech accelerators such as StartEngine are booming in Los Angeles, boosting prospects for tech start-ups locally and, programme founders hope, transforming the region into a technology hub.

Considered boot camps for early-stage companies, tech accelerator programs such as Y Combinator have been an integral part of Silicon Valley, helping companies that may not have had a chance otherwise.

Revenue sources dry up

Now a slew of new accelerators are taking root in the Los Angeles area, where hundreds of tech start-ups have surfaced recently. Programme founders say they believe the region dubbed Silicon Beach is on the cusp of becoming a serious tech contender, but needs help getting off the ground — especially as traditional avenues for funding dried up during the recession.

MuckerLab, Amplify, Launchpad LA and K5 are just some of the local accelerators to emerge. They're being run by former tech executives and investors who are using their connections to prop up budding companies, typically for a 6 per cent to 10 per cent stake in the start-ups.

Unlike tech incubators, which originate ideas in-house and form teams around them, accelerators help entrepreneurs with established business visions.

Applications are accepted for about five to 20 spots in a class, with start-ups receiving roughly $20,000 (Dh73,560) to $50,000 in seed funding to cover salary and other expenses. Programmes run 10 to 16 weeks and include business development as well as financial guidance and legal and administrative support.

— Los Angeles Times