Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

Y Combinator's 2012 cohort produced $93.3 billion in exit value. That batch included Coinbase and Instacart. Meanwhile, most accelerator programs produce exactly zero billion-dollar companies.

If you're an angel investor, you need to understand accelerators because they're either going to be your best source of deal flow or an expensive distraction. The difference is knowing which accelerators actually work and how to engage with them strategically.

Should Your Portfolio Companies Apply?

If you've already invested in a company, should you push them to apply to an accelerator?

It depends on where they are and what they need. If they're pre-product and need structured guidance to figure out product-market fit, a top-tier accelerator can be worth the 5% to 7% equity. If they already have traction and clear momentum, giving up that much equity for three months of mentorship is expensive.

The math: Y Combinator now invests $500,000 for 7% equity. That's a $7.14 million post-money valuation. If your company is already valued higher than that and has decent traction, YC might not make sense unless the network access is truly transformational.

But if your company is struggling to raise, an accelerator can be a lifeline. Demo days create forcing functions. Investors who wouldn't take a meeting otherwise will show up because 200 companies are presenting in one day and they don't want to miss the next Airbnb.

One thing Elizabeth Yin emphasizes: if you're in an accelerator, use it to network. Don't just focus on building product. The real value is meeting other founders, investors, and future hires. Accelerators give you a chance to build relationships that pay off for years.

The Demo Day Investment Strategy

Let's talk about investing at demo day, because this is where angels often get it wrong.

First, understand the dynamics. Demo day is a bidding war by design. Every investor in the room is looking at the same 50 to 100 companies at the same time. That creates artificial urgency and often inflates valuations. Companies that look mediocre in month two suddenly have five term sheets by demo day.

As Haley Bryant from Hustle Fund points out, you're competing with investors who have spent the last three months building relationships with these founders. You're showing up cold. That's a disadvantage.

The smarter move is to invest before demo day. Top accelerators like YC allow investors to meet with companies during the batch. If you can get warm intros and invest before demo day, you avoid the bidding war entirely. You also signal confidence in the company before it's obvious to everyone else.

But the catch is most angels don't have access during the batch unless they're well-connected in the accelerator's network. That's where being part of groups like Angel Squad helps. You get access to deal flow that doesn't hit demo day, and you're not fighting 500 other investors for allocation.

Which Accelerators Actually Matter?

Not all accelerators are created equal, and this matters more than most angels realize.

In the US, Y Combinator is the gold standard. Their brand opens doors. Their network is unmatched. Their companies raise money faster and at higher valuations than almost anyone else. If you see YC on a pitch deck, it's worth paying attention.

Techstars is solid, especially for specific industries and geographies. They run dozens of programs globally, and some are much better than others. The quality varies by managing director, so do your homework on the specific program, not just the brand.

500 Global, formerly 500 Startups, focuses on international markets and underrepresented founders. Their companies tend to be earlier and riskier, but they've produced some huge winners. If you're interested in emerging markets or diverse founders, they're worth tracking.

Beyond the big names, there are vertical-specific accelerators like Alchemist for enterprise startups or Techstars' industry-focused programs. These can be valuable if you're investing in a specific sector and want concentrated deal flow.

Eric Bahn at Hustle Fund talks about how accelerators that have greater networks to investors produce better results. It's not just about the curriculum. It's about who shows up to demo day and whether those investors actually write checks.

The Follow-On Decision

Let's say you invested in a company before they joined an accelerator. Now they've graduated, raised their demo day round, and are coming back asking you to follow on in their Series A. Do you?

This is where Elizabeth Yin's framework on follow-on investing matters. You shouldn't follow on just to protect your stake. You should follow on if you believe the new check can generate a strong risk-adjusted multiple.

Ask yourself: has the accelerator changed your conviction in this company? Did they achieve the milestones you expected? Do you believe they can now hit the valuation needed for your new check to return capital?

Accelerators improve startups, but they don't fix fundamentally broken businesses. If a company was struggling before the accelerator and is still struggling after, being a YC alum won't save them. Don't follow on out of obligation.

Making It Work for Your Strategy

So, where do accelerators fit in your angel investing strategy?

If you're early in your angel career, targeting accelerator alumni is a smart move. The filtering is done for you. The companies have been vetted. You're more likely to avoid catastrophic failures, even if you also miss some of the highest-upside deals.

If you're more experienced and have strong networks, investing before accelerators or skipping them entirely might make sense. You can get better valuations, and you're not dependent on someone else's curation.

And if you're investing in your portfolio companies, push them toward accelerators when it makes sense but don't treat it as a silver bullet. An accelerator can help a strong company accelerate. It can't turn a weak company into a strong one.

At the end of the day, accelerators are tools. They work when used correctly and fail when people expect them to do magic. If you understand what they're good at, what they're not good at, and how to engage with them strategically, they can be a valuable part of your angel investing toolkit.

If you're looking to learn from other angels navigating these decisions, Angel Squad offers a community where investors share real experiences with accelerators, demo days, and what actually worked versus what was just hype.