WELCOME TO STARTUPLAND: WHERE EVERYONE IS A FOUNDER, EVERYONE IS AN ACCELERATOR — AND VERY FEW BUILD A GREAT COMPANY

There was a time when starting a company meant starting a company.

Today, apparently, one starts a startup.

Nobody seems to open a software company anymore. They launch a disruptive platform.

Nobody develops a product. They create an ecosystem.

Nobody sells something. They achieve traction.

Nobody looks for customers. They scale.

Nobody goes bankrupt. They pivot.

And nobody appears to be simply a consultant on social media anymore.

They are mentors, venture builders, innovation catalysts, startup advisors, ecosystem architects and, increasingly, accelerators.

LinkedIn in particular sometimes produces the curious impression that there may now be more people accelerating startups than startups actually worth accelerating.

There is nothing inherently wrong with any of this.

Some accelerators are exceptionally valuable. Some venture capital firms have helped create companies that changed entire industries. Some founders genuinely transform ideas that initially sound absurd into businesses worth billions.

But the vocabulary has expanded considerably faster than the population of genuinely exceptional companies.

And that is where the interesting economic question begins.

What exactly is a startup?

What does an accelerator actually accelerate?

Who provides the money?

What does that money cost the founders?

How many businesses really reach what we might reasonably call success?

And underneath all the storytelling, pitch decks, demo days, podcasts, inspirational posts and photographs of founders staring thoughtfully at whiteboards, what actually determines whether a startup survives?

The answer is rather less romantic.

You need an idea.

You need a market.

You need execution.

You need people.

You need timing.

You need customers.

And in many genuinely scalable businesses, sooner or later, you need somebody willing to give you a great deal of money before you have definitively proved that you deserve it.

That last group is much smaller than social media might lead us to believe.

FIRST: WHAT IS A STARTUP?

This is surprisingly difficult to answer because the word has no single universal legal meaning.

A newly incorporated restaurant is a new business.

A local law firm can be a new business.

A family opens its first furniture shop: new business.

None of these would ordinarily be described by venture investors as a startup.

The essential difference is not simply age.

It is scalability under conditions of uncertainty.

A startup is generally understood as a young company attempting to discover and exploit a repeatable business model capable of rapid growth, frequently through technology, innovation or a model whose marginal cost grows substantially more slowly than revenue.

That is why a neighbourhood restaurant and a SaaS company behave differently economically.

If a restaurant wants to serve ten times as many customers, it may need more restaurants, kitchens, chefs, waiters and physical capital.

A software platform can sometimes add its millionth customer at a tiny fraction of the cost required to acquire its first thousand.

That possibility of disproportionate scale is what venture capital wants.

The OECD itself illustrates the definitional problem. Some OECD research uses a statistical definition of startups as firms zero to five years old, while explicitly acknowledging that different studies use different definitions.

Europe has only recently attempted to standardise matters further. In March 2026, the European Commission adopted a recommendation establishing common EU definitions for innovative enterprises, innovative startups and innovative scaleups as part of its Startup and Scaleup Strategy.

So there is an important distinction:

“Startup” can be a statistical category, a policy category, a legal category in a particular jurisdiction — or simply an entrepreneurial description.

Putting STARTUP in a LinkedIn biography does not, unfortunately, constitute an economic category.

A STARTUP IS NOT A SMALL COMPANY WITH BETTER GRAPHIC DESIGN

A genuine venture-style startup normally contains several characteristics.

It is young.

It operates with unusually high uncertainty.

It is searching for, or has recently identified, product-market fit.

It expects rapid growth.

Its addressable market should be large enough to justify substantial investment.

Its economics should potentially allow scale.

It is frequently financed externally before reaching sustainable profitability.

And the investor is not normally buying today’s cash flow.

The investor is purchasing a claim on a radically larger company that may exist tomorrow.

This explains one of the strangest features of startup finance.

A perfectly profitable company producing €2 million annually may be unattractive to a venture capitalist.

A company losing €5 million annually may attract a $50 million valuation.

Why?

Because venture capital does not primarily price current comfort.

It prices asymmetric future outcomes.

A venture investor knows most investments will not become extraordinary.

The economic model therefore depends on a small number of companies generating disproportionate returns.

The objective is not to find ten respectable SMEs.

It is to find one company capable of paying for the other nine.

THEN WHAT IS A SCALEUP?

A scaleup is not simply a startup whose founder has recently hired a PR agency.

It is a company that has moved beyond experimentation and demonstrated substantial growth.

The OECD commonly defines a scaler as a company producing at least 10% annualised growth in employment or turnover for three consecutive years, starting with at least ten employees.

The conceptual distinction is useful.

A startup is asking:

Can this work?

A scaleup is increasingly asking:

How large can this become?

Those are very different problems.

AND WHAT EXACTLY IS AN ACCELERATOR?

Even the OECD acknowledges that there is no universally agreed international definition separating incubators and accelerators.

Broadly, an incubator usually assists very early businesses over a relatively extended period.

An accelerator, traditionally, is more selective, shorter and more intensive.

It is typically cohort-based, combines mentoring and education with investor access, and may provide capital in exchange for equity.

And here the terminology becomes entertaining.

Because there is a meaningful difference between an institution that invests money, selects companies, introduces founders to institutional investors and has a documented portfolio —

and someone with a Zoom subscription, a motivational vocabulary and “Startup Accelerator” written underneath their name.

THE ACCELERATOR INDUSTRY HAS BECOME AN INDUSTRY OF ITS OWN

Originally, accelerators solved a genuine information problem.

Founders needed investors, lawyers, technical expertise, recruiting networks and experienced advice.

Investors needed mechanisms for discovering and filtering extremely young companies.

Accelerators connected the two.

Then the accelerator itself became a business.

And once an industry becomes fashionable, another industry inevitably appears:

people selling access to the industry.

Hence:

startup academies,

innovation hubs,

venture studios,

founder communities,

boot camps,

incubators,

pre-incubators,

pre-accelerators,

accelerators,

post-accelerators,

growth labs,

innovation labs,

entrepreneurship labs,

and consultants explaining how to pitch to consultants who may know somebody who knows an investor.

The vocabulary itself has achieved remarkable scalability.

The companies occasionally less so.

Y COMBINATOR: WHAT A REAL ACCELERATOR ACTUALLY DOES

Y Combinator’s current standard deal provides $500,000.

The first $125,000 is exchanged for 7% of the company.

Another $375,000 is invested through an uncapped MFN SAFE.

This is important.

YC does not merely tell founders how inspiring entrepreneurship is.

It writes a cheque.

And in exchange it obtains ownership.

What founders receive is therefore:

capital,

network,

credibility,

investor access,

and perhaps most importantly, a powerful market signal.

TECHSTARS

Techstars’ current standard accelerator investment is $220,000.

It consists of a $20,000 investment associated with 5% common equity, plus a $200,000 uncapped MFN SAFE.

Again:

the mentorship has value.

The network has value.

The brand has value.

But equity has value too.

Nothing here is free.

THE GREAT STARTUP MYTH: “ALL YOU NEED IS A GREAT IDEA”

No.

A great idea without execution is an observation.

A great idea without customers is a hypothesis.

A great idea without economics is a hobby.

And a capital-intensive great idea without capital is often simply a very detailed PowerPoint presentation.

CB Insights analysed 431 VC-backed startups that shut down from 2023 onward.

The most common terminal problem was running out of capital: 70%.

But underneath that:

43% showed insufficient product-market fit.

29% suffered poor timing.

19% had unsustainable unit economics.

Money matters enormously.

But venture capital can only postpone the verdict of the market.

It cannot repeal it.

THE PART FOUNDERS SOMETIMES FORGET: THE MONEY IS NOT FREE

Suppose an investor puts $2 million into your business at an $8 million pre-money valuation.

The post-money valuation becomes $10 million.

The investor receives approximately 20%.

The founder who previously owned 100% now owns approximately 80%.

This is dilution.

But dilution itself is not necessarily bad.

The relevant question is what happened to the economic value of what remains.

Before the transaction:

100% × $8 million = $8 million.

Immediately after the transaction, ignoring other complications:

80% × $10 million = $8 million.

The founder has a smaller percentage of a better-capitalised company.

If the investment then allows that company eventually to become worth $100 million, the founder’s diluted stake can become vastly more valuable.

This leads to a question founders should understand before signing any term sheet.

CAN A FOUNDER CONTRACTUALLY PROTECT HIMSELF FROM DILUTION?

Yes.

But not quite in the simplistic sense of writing:

“My percentage shall never decrease.”

Every new equity financing has arithmetic consequences.

If new shares are issued to an investor, somebody else’s percentage must normally decrease unless existing shareholders invest additional money or another shareholder bears disproportionate dilution.

A founder can nevertheless negotiate substantial protections through the shareholders’ agreement, corporate charter and share-class structure.

The most straightforward mechanism is a pre-emption or pro-rata participation right.

Suppose the founder owns 40%.

A new financing round occurs.

The founder may have the contractual right to purchase enough of the newly issued securities to preserve that 40%.

But there is an obvious condition:

the founder must provide additional capital.

The right protects the opportunity to maintain ownership.

It does not normally provide free shares.

OWNERSHIP AND CONTROL ARE NOT THE SAME THING

This distinction is fundamental and frequently misunderstood.

A founder may lose economic ownership without losing corporate control.

Imagine two share classes.

Class A: one vote per share.

Class B founder shares: ten votes per share.

Through successive financing rounds, the founder’s economic ownership might move:

100% → 70% → 50% → 35% → 25%.

Yet because the founder’s shares carry enhanced voting rights, the founder might still control a majority of shareholder votes.

This is the logic behind dual-class share structures used by several major technology companies.

It means we should distinguish three separate concepts:

Economic ownership — what percentage of the company you financially own.

Voting power — what percentage of shareholder votes you control.

Governance power — what decisions you can make, appoint, veto or block.

Those numbers need not be identical.

THE SHAREHOLDERS’ AGREEMENT CAN MATTER ALMOST AS MUCH AS THE VALUATION

A sophisticated founder therefore negotiates much more than price.

Possible protections can include:

pre-emption rights;

pro-rata participation rights;

reserved matters requiring founder consent;

board appointment rights;

supermajority requirements;

restrictions on issuing new shares;

information rights;

rights relating to changes in control;

and appropriately structured voting classes.

But investors negotiate protections too.

These may include:

preferred shares;

liquidation preferences;

anti-dilution provisions;

board seats;

protective provisions;

conversion rights;

drag-along provisions;

and veto rights over specified corporate actions.

This produces one of the most important lessons in startup financing:

A $100 million valuation with terrible terms can be less attractive than an $80 million valuation with excellent terms.

The headline valuation tells you what the newspaper will write.

The term sheet tells you what you actually own.

“ANTI-DILUTION” DOES NOT NECESSARILY PROTECT THE FOUNDER

This terminology can be misleading.

VC term sheets frequently contain anti-dilution provisions.

But these provisions generally protect existing preferred investors against certain subsequent financing rounds at lower valuations.

Suppose an investor buys shares based on a $100 million valuation.

The next round occurs at $50 million.

That is a down round.

A weighted-average anti-dilution mechanism may adjust the conversion economics of the investor’s preferred securities.

A more aggressive full-ratchet provision can provide substantially greater protection.

Who bears the economic consequences?

Potentially the founders and other common shareholders.

So when a founder sees “anti-dilution protection” in a term sheet, the first question should not be:

“Excellent — I am protected?”

It should be:

“Who exactly is being protected from whom?”

DILUTION IS NOT THE ENEMY

This deserves to be stated clearly.

Imagine two founders.

Founder A owns:

100% of a €1 million company.

Founder B, after several financing rounds, owns:

20% of a €1 billion company.

Founder B has suffered enormous percentage dilution.

Founder B’s stake is nevertheless notionally worth:

€200 million.

The objective of startup financing should therefore not be:

“Never allow my percentage to fall.”

A more rational objective is:

“Accept dilution when the capital, network and capabilities obtained increase the expected value of my remaining ownership by more than the percentage I surrender.”

That is capital allocation.

And it is why dilution needs to be understood economically rather than emotionally.

Dilution is not necessarily destruction of founder value. Badly negotiated dilution can be.

WHAT DO VENTURE CAPITALISTS ACTUALLY BUY?

They are buying probability.

A very unusual kind of probability.

They know many portfolio companies will fail.

They know others will survive but never produce extraordinary returns.

Therefore a relatively small number of investments must generate enormous outcomes.

VC economics is fundamentally asymmetric.

The investor is not searching primarily for:

“a nice profitable small business.”

The investor is searching for:

a business capable of becoming disproportionately large.

This explains the obsession with TAM, scalability, network effects, software margins and winner-takes-most markets.

PRODUCT-MARKET FIT: THE TERM THAT MATTERS MORE THAN “DISRUPTION”

Product-market fit means that real customers genuinely want what you are selling.

Not:

“My friends think it’s brilliant.”

Not:

“We had 50,000 impressions.”

Not:

“Our pitch received an award.”

The relevant questions are:

Do people use it?

Do they return?

Do they pay?

Does retention persist?

Can customers be acquired economically?

Is lifetime value greater than customer acquisition cost?

Would customers genuinely care if the product disappeared?

These questions are less glamorous than disruption.

They are also considerably more useful.

UNITED STATES: WHERE THE MONEY REALLY IS

The United States remains the dominant global venture ecosystem.

NVCA/PitchBook data show U.S. venture firms completed 14,320 deals worth approximately $215.4 billion in 2024, representing around 57% of worldwide VC deal value.

U.S. venture funds also had approximately $307.8 billion of dry powder available.

This is an extraordinary financing machine.

But enormous amounts of capital do not mean capital is easy to obtain.

They mean enormous amounts of capital compete to own a relatively small population of companies investors believe can become extraordinary.

EUROPE: SUCCESS EXISTS, BUT THE NUMBERS ARE SELECTIVE

European venture funding reached approximately $58 billion in 2025, according to Crunchbase.

AI became Europe’s largest startup investment sector.

But consider the unicorn numbers.

In 2024, only around 13 European startups crossed the $1 billion valuation threshold.

In 2023 there had been seven.

In 2021?

Sixty-nine.

This illustrates something important.

A unicorn is partly an entrepreneurial phenomenon.

It is also a capital-market phenomenon.

Cheap capital creates one kind of startup ecosystem.

Selective capital creates another.

A UNICORN IS NOT NECESSARILY A SUCCESSFUL BUSINESS

A unicorn is simply a privately held company valued above $1 billion.

It does not necessarily mean:

the company is profitable;

it produces positive cash flow;

its founders have received $1 billion;

investors can actually sell at that valuation;

or public markets would agree with it.

A valuation is not cash.

A financing round is not an exit.

And an exit does not necessarily produce the same return for every shareholder.

If we want documented financial success, more meaningful evidence includes:

sustainable profitability;

a successful IPO;

a cash acquisition;

significant secondary transactions;

or substantial distributions to shareholders.

The population becomes considerably smaller.

LATIN AMERICA: CAPITAL EXISTS — BUT LOOK AT THE CONCENTRATION

Latin American venture investment recovered during 2025.

But the most revealing statistic comes from LAVCA.

Only five companies — Plata, ADDI, Klar, Omie and Kavak — absorbed approximately 25% of all venture dollars invested in Latin America during 2025.

Think about that.

Thousands of entrepreneurs.

Thousands of pitch decks.

Accelerators.

Demo Days.

Innovation conferences.

Panels.

Mentors.

LinkedIn announcements.

And five companies absorb approximately one dollar in every four.

That is what venture-capital selectivity actually looks like.

SURVIVORSHIP BIAS: STARTUP CULTURE’S GREAT OPTICAL ILLUSION

Study:

Airbnb.

Stripe.

Uber.

Revolut.

Nubank.

Canva.

And entrepreneurship looks like an extraordinary machine for creating billionaires.

Now study the thousands of companies founded around the same period that disappeared.

The conclusion changes.

We remember winners because winners remain visible.

Failed companies leave:

dead websites,

expired domains,

abandoned LinkedIn pages,

and founders whose biographies eventually say:

“Previously built in fintech.”

The denominator quietly disappears.

That is survivorship bias.

WHY FUNDING HAS BECOME SO CONCENTRATED

The venture market has become increasingly selective.

Fewer transactions.

Larger amounts flowing toward companies already showing exceptional promise.

Enormous concentration around AI.

Greater scrutiny of capital efficiency.

When money was exceptionally cheap, investors could tolerate speculative growth for longer.

When the cost of capital rises, the questions become different.

Instead of:

“How rapidly can you acquire customers?”

investors increasingly ask:

“How much does acquiring them cost?”

Instead of:

“How large can revenue become?”

they increasingly ask:

“When does any of this become cash?”

And that brings us to perhaps the simplest description of the entire change:

“THIS IS NOT THE DEATH OF INNOVATION. IT IS THE RETURN OF ARITHMETIC.”

Innovation has not disappeared.

Capital has simply remembered that eventually numbers have to work.

SOCIAL MEDIA HAS MADE THE STARTUP WORLD EVEN STRANGER

Entrepreneurship has become content.

Funding is content.

Hiring is content.

Accelerator admission is content.

Awards are content.

Conference appearances are content.

New offices are content.

Changing the logo is content.

Actual cash generation?

Rather less photogenic.

This creates an environment where the appearance of momentum can become almost indistinguishable from momentum itself.

Until payroll arrives.

THE STARTUP ACCELERATOR PARADOX

The best accelerators solve genuine problems.

But the explosion of accelerators creates an obvious paradox.

If thousands of organisations claim to select only exceptional startups, either:

the world is experiencing the greatest concentration of exceptional entrepreneurs in human history;

or the word “exceptional” has experienced some inflation.

Before joining an accelerator, a founder should therefore ask:

Does it invest its own capital?

How much?

What equity does it take?

Who are its alumni?

How much have those alumni subsequently raised?

How many failed?

How many produced meaningful exits?

Who are the actual mentors?

Can it introduce founders directly to institutional investors?

And perhaps most importantly:

How does the accelerator itself make money?

If its business succeeds regardless of whether your startup succeeds, its incentives deserve examination.

AN IDEA IS NECESSARY. CAPITAL IS NECESSARY. NEITHER IS SUFFICIENT.

The popular formula is:

Great idea + determination = success.

Reality is closer to:

Idea × market × timing × execution × team × capital × distribution × economics × luck.

If one important variable approaches zero, the multiplication becomes uncomfortable.

Capital can finance time.

It cannot manufacture product-market fit indefinitely.

A brilliant founder can choose the wrong market.

An average product can win through extraordinary distribution.

A heavily financed company can burn $500 million proving customers never cared.

An underfinanced company can die six months before discovering its market.

And luck matters more than successful founders generally remember when writing autobiographies.

SO, IS THE STARTUP WORLD A FRAUD?

Absolutely not.

Venture capital is one of the most extraordinary capital-allocation mechanisms modern capitalism has created.

A traditional bank asks:

“What collateral do you have?”

A venture capitalist can ask:

“What happens if you’re right?”

That difference has financed extraordinary innovation.

But venture capital is built around extreme selection.

The mistake is not believing startups can change the world.

They clearly can.

The mistake is assuming that because a handful change the world, every business calling itself a startup is likely to.

PERHAPS WE NEED FEWER STARTUP STORIES — AND MORE COMPANY STORIES

Eventually the terminology becomes irrelevant.

Startup.

Scaleup.

Unicorn.

Accelerator.

Disruptor.

Founder.

Innovation ecosystem.

At some point every company encounters the oldest questions in capitalism:

Do customers want what you sell?

Will they pay enough?

Can you deliver it profitably?

Can competitors copy it?

Can you finance growth?

Can you retain customers?

Can you generate cash?

Can you survive?

Everything else is architecture around those questions.

THE FINAL REALITY

There are now thousands of people teaching founders how to become founders.

Thousands teaching startups how to pitch.

Thousands teaching investors how to discover startups.

Thousands organising conferences where founders meet investors who meet accelerators who meet consultants who explain how founders can meet investors.

All perfectly respectable activities.

But somewhere, eventually, somebody still needs to:

invent something useful, build it, sell it — and convince another human being to pay for it.

That part remains stubbornly old-fashioned.

A great idea matters.

Capital matters enormously.

But the real formula is closer to:

Find a real problem. Develop an unusually good solution. Demonstrate that somebody wants it. Build an exceptional team. Understand your economics. Find capital before you run out of time. Negotiate that capital intelligently. Accept dilution when it creates more value than it destroys. Use the money better than competitors. Repeat. Survive. Scale.

And perhaps — perhaps — produce an exceptional company.

There is nothing pessimistic about that.

The fact that it is difficult is precisely why genuine entrepreneurial success deserves respect.

Just perhaps slightly less applause for the word startup itself.

And considerably more attention to the company underneath it.

Roberto Balbino — CEO, Fintech SCB
Independent analyst of finance, economics, geopolitics and global markets.
www.fintechscb.com