How Do Accelerators Impact the Performance of High-Technology Ventures?
52 Pages Posted: 3 May 2015 Last revised: 8 Oct 2016
Date Written: August 1, 2016
Accelerators aim to help nascent companies increase the likelihood of funding and successful outcomes by providing capital, enabling connections to industry experts, and increasing exposure to investors. However, it remains unclear whether and how accelerators impact the performance of early stage ventures. Using a novel dataset of accelerator companies and non-accelerator companies, I establish stylized facts and propose a model to identify the mechanisms through which accelerators impact funding, acquisitions, and closures. I find that through both selection and treatment effects, accelerator companies raise less money, close down earlier and more often, conditional on closing raise less money, and appear to be more efficient investments compared to non-accelerator companies. Additional analysis using rejected applicants further supports these findings. These results suggest that accelerators help resolve uncertainty around company quality sooner such that founders can make funding and exit decisions accordingly.
Keywords: entrepreneurial finance, new ventures, business accelerators
JEL Classification: M13, O32, L26
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