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Business Accelerators: Evidence from Start-Up Chile
Abstract
Do business accelerators add value? If so, how? We investigate these questions by focusing on Start-Up Chile, a government-backed ecosystem accelerator. Using a regression discontinuity design, we show that entrepreneurship-schooling services of accelerators can significantly increase new venture performance by improving the entrepreneurial capital of participants. We speculate about the existence of four performance-enhancing mechanisms: greater social clout, the provision of an accountability structure that induces entrepreneurs to articulate and reflect about specific strategic tasks, an increase in self-efficacy, and know-how about building a start-up. We find no support for causal effects of basic services of cash and co-working space.
... In the midst of such transitions, these economies often still rely on public resources until private capital markets mature (Dinç, 2005), connections with government officials until legal systems formalize (Xin and Pearce, 1996), and institutional intermediaries until commercial and regulatory institutions can better facilitate market exchange (Khanna and Palepu, 2000). Further, science parks are part of a growing phenomenon of institutional intermediaries that facilitate this transition by linking private sector activities to public sector resources (Dutt et al., 2016; Gonzalez-Uribe and Leatherbee, 2015; McDermott et al., 2009). Like many emerging economies, the Chinese government is a major funding source for commercial activity (Dinç, 2005). ...
... Institutional intermediaries are often essential for bridging between the state and private sector entrepreneurs (Dutt et al., 2016; McDermott et al., 2009). For example, Start-Up Chile is a key institutional intermediary linking government funds to support about 1,000 Chilean ventures (Uribe and Leatherbee, 2015). Science parks are often a major intermediary connecting private sector entrepreneurs with the state. ...
... Since their inception, science parks have become essential and ubiquitous intermediaries by which the Chinese state implements its public policy and directs its resources to private sector entrepreneurs. In summary, the governments of many emerging economies such as those in East Asia (Evans, 1995), Central and Eastern Europe (Kogut and Spicer, 2002), and South America (Uribe and Leatherbee, 2015) as well as China (per above) encourage entrepreneurship as part of their transition to a market-based economy. These governments often work through institutional intermediaries such as science parks to achieve these economic aims. ...
Research Summary: Governments in emerging economies often use institutional intermediaries to promote entrepreneurship, and bridge the void between ventures and public funding. While prior literature describes what institutional intermediaries do, it leaves open how intermediaries support different types of entrepreneurs. By comparing science park and non-science park firms in Beijing and across China, we distinguish which entrepreneurs benefit from certification v. capability-building through the introduction of two new constructs: skill adequacy and context relevance. Broadly, our study adds insights at the nexus of emerging economies and entrepreneurship research, and to the tie formation and institutional intermediaries literatures.
Managerial Summary: A key dilemma facing entrepreneurs is how to finance their ventures. While entrepreneurs in developed economies can seek VC or angel investment, entrepreneurs in emerging economies often need to pursue potential government funding opportunities. Our study highlights three strategies for acquiring government funding. Well-connected entrepreneurs can leverage their political ties to acquire such funding. Less-connected entrepreneurs can leverage science parks that in emerging markets are designed to help governments to identify promising ventures. For returnees whose ample experience abroad may not fit with local ways of doing business, gaining science park admission can certify quality and so ease the path to government funding. For technically skilled local entrepreneurs who lack business skills, science parks can help build such skills which then ease the path to government funding.
... As previously discussed, many authors address the importance of developing EE to start a new venture in Latin America (Guerrero and Urbano, 2017b;Gonzalez-Uribe and Leatherbee, 2014;Freire-Gibb and Gregson, 2019;Saiz-Álvarez and Coduras-Martínez, 2020). The results obtained in the previous section address three main aspects. ...
Purpose
The purpose of this study is to make an exploratory analysis of the impact of the entrepreneurial ecosystem (EE) as defined by Acs et al. (2014) on opportunity-driven senior entrepreneurial activity in Latin America.
Design/methodology/approach
The research uses data from the Global Entrepreneurship Monitor and the Global Entrepreneurship and Development Institute of five Latin America countries (Argentina, Brazil, Chile, Colombia and Mexico), providing a total of 15,019 observations of people that are 50+ years old, between the years 2013 and 2017. A multi-level logistic regression model was used to estimate the relation between the total entrepreneurial activity by opportunity of seniors and some EE indicators. A total of three equations were estimated on the data set described.
Findings
This research confirms the relevance of some elements of EE on senior entrepreneurship in Latin America. Entrepreneurial attitudes have a positive relationship with senior entrepreneurs, generating higher levels of entrepreneurial ventures. The combination of institutions that support these attitudes on the EE enhances senior entrepreneurial activity. It also demonstrates that a higher level of entrepreneurial education at postschool stages is relevant to increasing senior entrepreneurial activity.
Originality/value
This research makes some interesting contributions in the field of measuring the impact of EE on senior entrepreneurship by opportunity in developing countries, filling a literature gap. It allows us to glimpse some measures that policymakers could take to improve the entrepreneurial activity of this segment in the region, such as implementing programs that facilitate networking opportunities and mentorship, along with providing training in business and financial literacy.
... Specically, we show that not only informal nance is a non-negligble component of early-stage investment, but also that it can negatively aect the possibility of subsequent funding. 5 Thus, 1 For instance, the support of experienced and informed nanciers can provide valuable guidance and useful connections for start-ups and can potentially serve as a positive signal for subsequent investors (Kerr et al. [2011], Gonzalez-Uribe and Leatherbee [2014], Bernstein et al. [2017]). 3 According to the Global Entrepreneurship Monitor 2006 Report, over 75% of nascent entrepreneurs around the world expect to receive some funding from relatives, friends, neighbors or co-workers. ...
This paper investigates the effects of funding from family and friends (i.e. informal funding) on start-ups' subsequent access to venture capital. We retrieve information on young U.S. firms' financing activity from a novel dataset based on private placements filings (Form Ds). To address potential endogeneity issues, we use an instrument that hinges on founders' family size as an exogenous constraint on the supply of informal funds. Our results show that informal finance significantly reduces the probability of future financing events. We provide suggestive evidence that this is due to conflicts of interests between informal stakeholders and professional investors.
Entrepreneurial accelerator programs have emerged within university settings as a solution to reduce the notably high failure rate of new ventures. Accelerators seek to support entrepreneurs by providing services and experiences that prepare participants to confront challenges that occur throughout the entrepreneurial journey and connect them to a broader business ecosystem. However, despite existing research that points to a correlation between an entrepreneur's communication skills and the firm's ability to achieve key business milestones, the existing literature does not identify which specific communication skills entrepreneurs need nor the situations/audiences in which these skills are most applicable. Therefore, this study conducted five focus group interviews with 14 established entrepreneurs from the United States who have participated in a university accelerator program in an effort to uncover the most valuable communication skills for entrepreneurs and the situations in which these skills apply. The findings illuminate how the development of specific communication factors such as confidence when presenting, flexibility, and empathetic listening are essential for entrepreneurs to engage with a wide range of audiences. This study also provides recommendations for university accelerators seeking to facilitate the development of these communication skills in their programming.
Given the importance of entrepreneurship for economic development through social and economic transformation, entrepreneurship education and training (EET) is growing throughout the world. The research on EET is also expanding and there is a need to better understand the impact of EET on business performance and its differential effect in men and women. Accelerators are entrepreneurship EET programs. Based on human capital theory, the paper uses Accelerators to assess the impact of EET programs on startup business performance. Given that female entrepreneurs’ human capital attributes are different from those of men and that the various components of Accelerator programs have been found to produce a differential effect on women, the paper proposes that Accelerators have the potential to produce a more pronounced positive effect in startups founded by female founders. We test this conjecture by exploring the impact of Accelerators in startup fundraising, in which female entrepreneurs face a significant gap. Our results confirm that female entrepreneurs who go through Accelerators increase their chances of receiving Venture Capital financing and that the marginal effect is larger for female than for male entrepreneurs.
The concept of entrepreneurial ecosystems has been gaining considerable attention during the past decade among practitioners, policymakers, and researchers. However, to date, entrepreneurial ecosystem research has been largely atheoretical and static, and it focused mostly on advanced economies. In this paper, we therefore do two things. We first systematically review entrepreneurial ecosystem literature and propose a conceptual model that explicates three entrepreneurial ecosystem dynamics based on resource, interaction, and governance logics, respectively. We then systematically review empirical studies of emerging economy entrepreneurial ecosystems to build a theoretical framework that highlights their salient features. We reveal three key findings that challenge the direct application of the model vis-à-vis advanced economy entrepreneurial ecosystems to emerging economy entrepreneurial ecosystems: resource scarcities, structural gaps, and institutional voids. Our findings contribute to entrepreneurial ecosystem literature in terms of ecosystem dynamics and contextualizing entrepreneurial ecosystems in emerging economies. We also provide policy implications for emerging countries in fostering new venture creation.
Due to the intertwined nature of private and public interests, local governments tend to use collaborative partnerships involving entrepreneurs to promote regional entrepreneurship. However, there is still a gap in the theory with regard to the mechanisms underpinning these collaborative partnerships. Drawing on the institutional entrepreneurship literature, we identify the enabling conditions and articulate the role played by local government as an institutional entrepreneur in fostering regional entrepreneurship through entrepreneurial public–private collaborative partnerships. This paper explicates two distinct mechanisms – the establishment of new institutional arrangements by the institutional entrepreneur and the advocation of diffusion by other actors – that underpin entrepreneurial public–private collaborative partnerships. Importantly, we underscore the crucial role played by returnee entrepreneurs who interact collaboratively with the institutional entrepreneur in affecting institutional change and fostering regional entrepreneurship. We conduct in-depth qualitative interviews with local government officials, entrepreneurs and high-tech park managers, in conjunction with performing content analysis of policy documents in a peripheral region of China – areas that have largely been neglected in scholarly research. This paper concludes with some theoretical and policy implications for public management and entrepreneurship.
To understand the intermediary role of accelerators in the developing regional entrepreneurial ecosystem of Bangalore, we analyze data from 54 interviews with accelerator graduates, accelerator managers, and other ecosystem stakeholders, and from 49 websites, 13 online video interviews, 26 online news sources and 301 pages of policy documents. Specifically, we adopt a socially-situated entrepreneurial cognition approach to theorize how accelerator expertise, existing at a meso-level, intermediates between (micro-level) founders and the (macro-level) ecosystem. In our model, four types of accelerator expertise—connection, development, coordination, and selection—together increase stakeholders’ commitment to the entrepreneurial ecosystem, leading to venture validation (success or failure) and ecosystem additionality. These findings indicate that accelerators contribute to ecosystems in a way that is distinct from, but supportive of, building individual ventures.
http://onlinelibrary.wiley.com/doi/10.1002/sej.1281/abstract
Purpose
The purpose of this study is to addresses the role accelerators as an authentic learning based entrepreneurial training programs. Accelerators facilitate the development and assessment of entrepreneurial competencies in nascent entrepreneurs through the process of creating a start-up venture.
Design/methodology/approach
Survey data from applicants and participants of four start-accelerators is used to explore the linkages between accelerators and the elements of authentic learning. Authentic learning processes are then mapped onto the start-up processes that occurs within the accelerators.
Findings
Accelerators take in nascent entrepreneurs and work to create start-ups. This activity develops both the participants’ entrepreneurial competencies and facilitates authentic self-reflection.
Research limitations/implications
This study explores how accelerators can be useful as authentic learning platforms for the development of entrepreneurial competencies. Limitations include perceptual measures, and the inability to conduct paired sampling.
Practical implications
Entrepreneurship training is studied through the lens of authentic learning activities that occur within an accelerator. Participants develop and assess their mastery of and interest in entrepreneurship through tasks, exposure to experts and mentors, peer-learning, and assessments such as pitching to investors at Demo-Day.
Originality/value
This paper reports on the authentic learning processes and its usefulness in competency development and self-appraisal by accelerators participants. The opportunity for competency development and self-appraisal by nascent entrepreneurs before escalating their commitment to a start-up may be an accelerator’s raison d'être.
Purpose
Women in entrepreneurship can have a significant impact on economic and social development globally and particularly in developing countries. But the challenges entrepreneurial women face are unique and multiple, pressing the need for research and policies to maximize impact. The purpose of this paper is to analyze the challenges women start-up founders face to secure funding in the technology industry. The tech industry was selected because it is a non-traditional industry for women with high potential for role models to bridge an existing gap in information on women start-up founders to secure capital financing to attain business sustainability. It covers venture capital investors’ role, Latin American cultural reasons, and gender.
Design/methodology/approach
This study is based on an inductive, qualitative approach and in-depth interviews with 20 women entrepreneurs and start-up founders from Latin American countries who received support from the Chilean Government sponsored accelerator “Start-Up Chile.”
Findings
The analysis uncovered ten aspects that impact entrepreneurial women founders’ access to capital in three categories: capital needs, networks, and individual characteristics.
Originality/value
This study identifies factors that affect women entrepreneurs in raising capital and in facing the following challenges: first, working in a non-traditional field for women as it is the technology industry, and second assuming a leadership role as start-up founders. The results offer recommendation with potential to drive public policies in Latin America, which may be scalable to other developing and also to developed countries where market systems prevail. The findings show that women entrepreneurs, but also men, seeking start-up financing and alternatives are a viable source of employment and economic sustainability to mitigate the effects of increasing levels of unemployment worldwide.
Encouraged by research on the importance of entrepreneurship for innovation and sustained economic growth, governments aim to implement policies and programs that support entrepreneurs. The incubator model evolved into the accelerator model over the years, which is increasingly used as part of a broad-based approach to enable entrepreneurial eco-systems. This study focuses on a specific accelerator program initiated by the EU called Speed Up! Europe (SUE). Our preliminary research has shown that the involvement of multiple stakeholders in a public-private partnership (PPP) can result in a program that contains several rules and procedures that are perceived as obstructive to the entrepreneurial progress by participants. If so, this could leave participants to be dissatisfied with their experience. Through survey research we set out to find out whether this holds true in the case of SUE. Findings indicate that the SUE-program indeed contains various rules and procedures that are perceived as obstructive by participants. Through statistical analysis, a strong correlation between perceived bureaucracy and satisfaction with the accelerator program was proved to be significant. The high level of perceived bureaucracy in the SUE program contributes to the very low level of satisfaction with the program. Qualitative responses on the survey confirm these outcomes. The results of this study could have implications for policymakers aiming to stimulate and enable entrepreneurial eco-systems in the future.
Venture accelerators are entrepreneurial development instruments that help startups grow in their earliest stages. Accelerators have proliferated in the United States and other developed countries despite the debate regarding their real value to entrepreneurs and ecosystems. New entrepreneurial development instruments are key to Latin America's economic growth. Accelerators have gained traction in the region, and more Latin American countries are implementing them to boost the success of local entrepreneurs. Through a series of interviews with scholars, accelerator executives, venture capital investors, and entrepreneurs, I explore the key strategies and characteristics of successful accelerators and propose a set of design drivers to better adapt the model to Latin American realities.
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