Investment Accelerators

48 Pages Posted: 11 Aug 2015  

Brad Bernthal

University of Colorado at Boulder

Date Written: August 11, 2015

Abstract

This Article documents and explains the legal and extralegal dimensions of Investment Accelerator systems. Accelerators are a new class of institution that supports entrepreneurs and early stage startups. Investment Accelerators take an ownership stake in companies that participate in an intensive, time limited program. Interviews reveal the surprising extent to which parties in many Investment Accelerators exchange economic value in the absence of formal agreement. Startups share proprietary information with highly accomplished mentors who, in turn, contribute their time and connections without direct compensation. This under contracted and informal arrangement raises concerns about opportunism. Data from an original investigation presents a description of Investment Accelerator organization and its effects. Research reveals three notable findings about how IAs organize resources in the service of innovation objectives. First, Investment Accelerators mingle formal and informal mechanisms to assemble a system of stakeholders that spans an entrepreneurial community. Second, informal mechanisms attract a wider pool of mentor participants, including desirable professionals who would not participate as full time hires or as contributors pursuant to a contract. Third, Investment Accelerators show that, under certain circumstances, informal network governance constrains opportunism, even where a network is rapidly assembled and new entrants are included.

Keywords: Silicon Flatiron, Silicon Flatirons, law and entrepreneurship, innovation, venture capital, accelerators, startups

Suggested Citation

Bernthal, Brad, Investment Accelerators (August 11, 2015). Silicon Flatirons Center, 2015. Available at SSRN: https://ssrn.com/abstract=2642436 or http://dx.doi.org/10.2139/ssrn.2642436

Brad Bernthal (Contact Author)

University of Colorado at Boulder ( email )

1070 Edinboro Drive
Boulder, CO 80309
United States

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