Data from the Global Accelerator Learning Initiative (GALI), whose work has been previously covered on this blog, has recently published a report to explore the differences in business accelerator performance. This can be attributed to the different approaches used to scale and drive new funds into ventures. One of the primary goals of accelerators is to maximize the net flow of funds: to maximize incoming flow of funds and minimize outflow. GALI data suggests that most accelerator programs do not perform evenly: in other words, while some accelerators can help accelerate the performance of startups, others can negatively affect company operations in a measurable way.
Investing Accelerators and Sector-Agnostic Accelerators Tend to Perform Better
In order to further assess what makes accelerator programs successful, we can identify differences between high-performing programs (where the so-called flow of funds was higher) and low-performing programs, drawn from the 2018 report, Accelerating the Flow of Funds into Early-Stage Ventures. The report findings demonstrate that programs which allocate more attention toward revenue growth generate the greatest returns. High-performing programs are also less likely to have an explicit sector focus, contradicting the common belief that specialized programs are more successful. It is often thought that, by having a sector focus, accelerators would be addressing more critical issues and connecting entrepreneurs with a more targeted network. The report found that only 45 percent of high-performing programs reported focusing on a sector, compared to 69 of low-performing programs.
There Are No Demonstrated Benefits to a Structured Curriculum
The report also provides evidence that there are no clear advantages associated with providing a structured curriculum or placing emphasis on specific topics. There are a similar percentage of high-performing and low-performing programs which report using a structured curriculum and there is also no significant evidence that the content or the type of instructors influences the success of accelerators.
In-Person Support Seems to Work Better than Remote Participation
Additionally, many elements of mentorship do not appear to impact the success of accelerators. Specifically, the number of mentors, mentor backgrounds, and average time spent with entrepreneurs were not components which affected startup performance. However, with high-performing programs, entrepreneurs received more in-person assistance compared to other programs where more time was spent working remotely. High-performing programs spent 36 percent of their time on-site with their cohort, whereas low-performing programs only spent 26 percent of their time on-site with their cohort. This in-person support can provide entrepreneurs with the environment they need to learn program content and apply their new insights into day-by-day operations.
Contributed by Alexandra Banks.
To access the full report, please click here.