The world went into lockdown in March 2020 as COVID-19 spread and social distancing measures were put into effect. This did nothing to stifle the flow of capital into startups by angel investors and venture capitalists.
Whether there is a pandemic or economic disaster, venture funds have to deploy their investors’ capital according to their fund life-cycle and timing requirements. In fact, the technology industry massively benefited from the shift to remote work, which led to even more capital flow into startups than originally projected pre-pandemic. This new remote landscape culminated in a record $125B in capital deployed globally in Q1 of 2021, a new all-time high.
This increase in demand for remote programs led to the Newchip Accelerator tripling its growth in 2020, with over 1,000+ startups across 35+ countries joining. The Newchip Accelerator’s enrollment is expected to double in 2021.
Here are some factors causing the surge in remote programs:
1. Traditional accelerators can no longer operate in-person and have been slow to pivot to online programming
Traditional accelerator programs required that founders take part in their offices, often making them move to a new city. Lockdowns and social distancing measures have made this model impossible, leading to the difficult pivot to virtual programming.
Most programs only operated in the top startup hubs, the traditional model often made the network for fundraising and mentors that can make-or-break a startup inaccessible to founders outside of these hubs.
Remote programs have the advantage of being able to serve founders regardless of their location. With many companies embracing a remote culture, and people leaving cities, demand for remote programs is growing faster than ever.
2. Venture capital firms are investing beyond the 10-mile radius of Menlo Park & Palo Alto
Even before COVID, Silicon Valley-based venture capitalists had already started looking outside of driving distance for deal flow. The pandemic accelerated this trend.
Today, VCs aren’t calling founders into their offices to pitch, they’re taking meetings and signing deals over Zoom. This has made the geographical location of founders much less important than it used to be.
Because of this, remote programs that connect founders to venture capitalists and angel investors virtually have had substantial increases in demand.
3. There are more founders starting companies than ever before
The Great Recession led to the second largest startup boom in history, with this period seeing the rise of Uber and Airbnb.
Economic downturns often lead to growth in the number of startups and small businesses. The damage done to the economy because of the COVID-19 pandemic was no exception to this pattern. People are starting companies in record numbers.
With traditional accelerator models being unable to operate due to continued social distancing measures, the future of accelerators is virtual.
Why are founders choosing the Newchip Accelerator?
A group of veteran entrepreneurs that believed there were untapped opportunities outside of traditional startup hubs founded the Newchip Accelerator in 2018. They wanted to make the venture ecosystem previously limited to founders and investors in top startup cities like San Francisco and New York more accessible.
Because of this, the Newchip Accelerator was designed as a remote program since its inception. It was ready for the transition to remote work the pandemic forced. While other accelerators had to pivot, the Newchip Accelerator only had to refine what it had offered from day one. Fast forward to today and enrollment is up by more than 3X from pre-pandemic numbers.
Since 2019, Newchip has helped founders raise over $300 million with over 70% of their graduates successfully raising capital. Overall, this has led to a 17.5X higher fundraising success rate for their startups compared to startups not part of an accelerator network.
More information about the Newchip Accelerator and how to apply can be found here.