A recent survey conducted by the Aspen Network of Development Entrepreneurs has shown that early venture businesses that participated in accelerator programmes report higher levels of new investments and revenues relative to their counterparts which did not participate.
The report entitled, ‘Accelerating the Flow of Funds into Early-Stage Ventures: An Initial Look at Program Differences and Design Choices’ has shown that many accelerators explicitly aim to catalyse equity investment, with programming focused on investment readiness and connections to equity investors.
The report shows that in a sample of 52 ventures, the average flow of incremental funds into participating businesses had a greater significant average flow than businesses that did not participate in any accelerator program.
“In the majority of these programs, this difference exceeds the reported cost of running the program. These superior funding outcomes are accomplished in different ways; many programs are most effective at stimulating revenue growth, while others are best at increasing the supply of outside equity investment,” the report states.
“Programs where equity growth dominates are more common in North America, while those where revenue growth dominates are more common in Latin America and Sub-Saharan Africa,” the report adds.
Start-up accelerators, also known as seed accelerators, are fixed-term, cohort-based programs that include seed investment, connections, mentorship, educational components, and culminate in a public pitch event or demo day to accelerate growth.
Accelerators offer different sets of experiences to entrepreneurs. Some programmes focus on skill-building, while others emphasise connections to investors, customers, and others.
According to the report, some accelerators and their partners aim to spur entrepreneurial solutions in specific domains, and programs that focus on specific sectors.
“Specialised programs are also believed by some to be more successful because they connect entrepreneurs to more targeted networks while providing knowledge and expertise that are more directly,” the report states.
