A new book out of Washington, DC., titled Observing Acceleration: Uncovering the Effects of Accelerators on Impact-Oriented Entrepreneurs, provides a comprehensive review and evidence-based analysis of accelerator programs, accelerated ventures, and the entrepreneurs they serve. Research for the book was conducted by and written as part of the Global Accelerator Learning Initiative (GALI)—a partnership between the Aspen Network of Development Entrepreneurs (ANDE), based at The Aspen Institute, and Emory University—designed to explore key questions about enterprise acceleration. Co-written by Peter W. Roberts of Emory University and Saurabh Lall of the University of Oregon, Observing Acceleration relies on quantitative and qualitative data to illuminate the landscape of accelerators—cohort-based programs that aim to stimulate a company’s revenue, employment, and investment growth.
Questions raised by Observing Acceleration
In their assessment, Roberts and Lall explore what type of accelerator programs are the most effective in increasing social venture start-up performance; examine if accelerators can support marginalized or hard-to-reach entrepreneurs in underdeveloped ecosystems across the globe; and question whether accelerators can be engines of growth for all entrepreneurs, including women-founded start-ups.
"The accelerator model has spread well beyond Silicon Valley, and there are now hundreds of accelerators supporting ventures from Bogota to Bangkok to Bengaluru," said Randall Kempner, Executive Director of the Aspen Network of Development Entrepreneurs (ANDE). "For the first time, we can look rigorously at data from hundreds of acceleration programs to understand their impact and ultimately improve programs and guide resources to the most effective types of support."
"Entrepreneurship is critical to the long-term efficacy of market-based economies, and social impact accelerators have a unique ability, if effective, to boost incomes and create high-quality jobs while solving challenges such as access to energy, education, and healthcare. It is with this understanding that we sought to test current assumptions about accelerators," said Peter W. Roberts, Academic Director of Social Enterprise at Goizueta, and Professor of Organization and Management at Emory University’s Goizueta Business School located in Atlanta, GA.
The GALI data set has expanded since the book was written. It now represents 280 acceleration programs and covers more than 19,000 entrepreneurs operating in more than 170 countries around the world.
The authors provide careful examination of ventures both enrolled in and rejected by accelerator programs to determine pre- and post-acceleration effects over a one-year period. Here are their main observations:
(1) In the aggregate, social impact accelerators are effective at driving venture growth.
Success for accelerator programs—and proof that "they’re working"—occurs when the commercial performance of an accelerated venture outpaces the performance of a venture which previously applied to but was not accepted into a program. The authors found that during the first year of participating in an accelerator program, on average, accelerated ventures experienced greater growth in reported revenues, full-time employees, and investment, such as debt, equity or philanthropic support.
(2) The impact of acceleration is highly skewed among the entrepreneurs participating in programs, with the top performing entrepreneurs accounting for an outsized proportion of benefits.
Based on their analysis, the researchers concluded that accelerators drive positive results—benefiting a select group of high-performing ventures—while inducing negative growth outcomes for lower-performing ventures. This “fail faster” effect, according to the authors, points to the important role that accelerators can play to help save time and resources as well as remove uncertainty.
(3) In emerging markets such as East Africa and Latin America, there is evidence that accelerators drive revenue growth but not outside equity investment.
Although the authors seek to challenge current assumptions about accelerators in emerging markets and provide qualitative insight to help address questions such as “are emerging-market ventures or ecosystems different than those in high-income countries?“ there remains a quantitative difference: emerging-market ventures, whether they apply to accelerator programs run in their country or in other countries, lag in outside equity investment compared to high-income country ventures. High-income companies report four times the average equity investment of corresponding emerging-market ventures.
(4) Women-run ventures seem to have a harder time attracting investment than equivalent male-run ventures.
When examining outside equity, debt, and philanthropic support, all-women teams receive less than one-third of the investment of all-male teams: all-men teams average more than $53,000; mixed-gender teams average approximately $40,000; and all-women teams report just $16,000. Yet, once doors are opened for women, and the initial investment hurdle has been cleared, women receive the same levels of equity as men. Referring to this as an “access deficit,” the authors claim that as long as it remains the status quo, objectives unique to female-led accelerated ventures—such as improving education, generating employment, and increasing equality and empowerment—will remain starved of necessary resources.
To help social venture accelerators track their own progress, GALI has built an open-source performance management tool to be released in August, 2019.