(Editor’s note: this is a guest post from Hanan Lavy, the Director of the Microsoft Ventures Accelerator in Israel, partly in response to Tech.eu co-founder Jon Bradford’s exposé on corporate accelerators).

Tech startup accelerators have become an accepted, if not crucial piece of the broader ecosystem. Yet, less than 10 years ago, the accelerator model was almost unheard of for many people.

The worldwide boom of tech startup accelerators began in earnest in 2005 with the establishment of Y Combinator (YC), one of the most famous accelerators in Silicon Valley.

Since then, dozens of accelerators have launched around the world, with the overwhelming majority of them failing to show positive returns to investors and being forced to shut down.

One of the successful hold-outs from the initial boom period is TechStars (TS), which was founded in 2006 and today runs programs in numerous locations, including Boulder, New York City, Seattle, San Antonio, Austin and London.

Over the last several years, corporations, including Microsoft, have launched their own accelerator programs, deploying different models that fit best with their respective corporate cultures.

These corporations have had to decide whether or not to provide funding to the companies in their program, should equity be taken, and if so, how much, and finally, and probably most importantly, how hands-on or off should a corporate accelerator be with the companies participating in the accelerator?

In a recent post here on Tech.eu (“Corporate-run startup accelerators: the good, the bad and the plain ugly“) Jon Bradford, managing director of TechStars in London (editor’s note: and co-founder of Tech.eu), covered some of the differences between corporate-run accelerators and private ones, and explored some of the questions raised above, with a specific focus on how corporations handled the question of funding.

His post takes a deep dive into some of the tough questions surrounding corporate accelerators, including the meaning of funding given and equity taken; what does it mean that a corporation appears in a startup’s cap-table at such an early stage; and how to measure funding + equity vs. no-funding + no-equity, etc.

Many of the corporate accelerators solved the funding dilemma in a very simple way – they simply do not offer direct funding to the startups in their respective programs, but rather partner with a professional investor to fill this need. In fact, the Microsoft Ventures Accelerator in Tel-Aviv offered this model in the past, partnering with Plus Ventures, one of the leading early-stage investors in Israel, to provide seed funding to companies in the program.

However, Bradford continues with a more meaningful point, which moves the discussion away from “to fund or not to fund” and which I want to explore a bit further here.

He believes that the help and professionalism of the managing director of an accelerator as well as his or her staff “represents singularly the most valuable and key differentiator for corporate accelerators,” and adds “this is probably the hardest element to quantify and measure.”

On this point, we cannot agree more.

Bradford’s idea is backed up by research conducted by Shalin Sheth from Second Century Ventures and written up in a blog post published recently on VentureBeat (“Do accelerators help startups? Here’s what we found”).

Sheth argues whether accelerators (any, not only corporate ones) are worth the effort, time and equity of a startup participating in the program. He analyzes the data from startups that graduated from nine leading U.S. accelerators, all established before December 2009, and reaches a number of interesting conclusions:

1. There is no silver bullet that all startups can use to choose an accelerator. It very much depends on the alignment of the startup and the domain expertise of the accelerator.

2. The direct involvement of the accelerator’s staff seems to most directly correlate with the success of the startups in the program.

3. Business development, in addition to help in fund raising, can be the real difference between a good accelerator and an excellent one (he signs his post with “Look for programs that focus beyond fund raising to include business development activities”).

We agree with both Bradford and Sheth that funding is only one part of the equation, and definitely not the entire story. Equally if not more important measures are:

1. What kind of network can the accelerator offer its startups?

A network that is a combination of its own connections as well as those of its mentors and partners’ connections is a vitally important element for any accelerator. These connections will eventually help the startups in the early stage of customer development, and later serve as design partners and beta sites during development. Eventually, these connections will bring them value-added investors.

2. How and to what extent does the accelerator help/provide guidance to the startups (i.e. hands-on/off programs, as well as alumni programs)?

3. What is the relevancy of the accelerator’s domain expertise to the startups that are part of the program?

Taking all of these factors into consideration, it quickly becomes clear that corporate accelerators have a lot to offer to the startups in their accelerator program. These “value-adds” are the cumulative result of their strategic approach, their worldwide footprint, unmatched domain expertise, access for entrepreneurs into their vast network, and hands-on programs with a strong alumni connection.

In those cases where corporations do in fact invest direct money in the startups (or do it through partners), the terms of the investment must be very friendly and refrain from limiting the startup’s business in its future.

As outlined above, when choosing the accelerator that is best for your budding business, don’t always follow the quick money. Remember that there are numerous factors that must be considered when making this important decision.

While it’s very tempting to go with the accelerator that can offer the most seed funding up front, good things definitely come to those who wait.

Also read:

A spotlight on the EU startup accelerator ecosystem: quantitative and qualitative analysis

It’s getting crowded: with roughly 100 startup accelerators across Europe, how many are enough?

What startups want (from their accelerators): support, support and support – and maybe a bit of cash

Featured image credit: Drazen / Shutterstock