Accelerators and Crowd-Funding: Complementarity, Competition, or Convergence in the Earliest Stages of Financing New Ventures?

Abstract

In this study, we examine the evolving role and dynamic impact of early-stage accelerators in the broader funding ecosystem available to entrepreneurs. We have assembled a unique, hand-collected data set that triangulates from a variety of sources to trace the trajectory of start-ups as they proceed through the early stages of outside financing. We pay particular attention to founding firm and founding team attributes, early stage investor roles, and full financing details. Our primary data sources for this study include Crunchbase, Thomson One’s VentureExpert, and LinkedIn. We track the universe of start-ups that participated in the Y Combinator and TechStars accelerators and a complementary sample of start-ups backed by angel investors over the period 2005-2011 (n= 740 observations). Our early results suggest that accelerator-backed start-ups receive the first round of follow-up financing significantly sooner; are more likely to be either acquired or to fail; are founded by entrepreneurs from a relatively elite set of universities; and exhibit substantially greater founder mobility amongst other accelerator-backed start-ups. We then seek to compare these companies — and when appropriate link them to — new ventures that have backing from crowd-funded platforms. By doing this, we are able to hone in on several key facets known to impact entrepreneurial outcomes such as survival and growth: founder background and experience, the role of the networks and interconnections, and the nature of the business idea.

Keywords: accelerators, entrepreneurial finance, angel investing, seed stage

JEL Classification: G24, L14, M13