Impact-oriented Accelerators Boost Equity Investment, But Not for All
3 min read · Feb 2025
Lall, Chen, and Roberts (2020)
“The various stigma associated with being a female entrepreneur, and the core structural problems associated with working in under-developed ecosystems, present challenges that seem beyond the scope of the accelerators in our sample.”
Summary
Impact-oriented accelerators can significantly boost equity investment in ventures, but this benefit is not evenly distributed. This paper reveals that accelerator participation leads to an increase in funding, yet their positive impact is limited to ventures in developed markets and those with male-led founding teams. Ventures operating in emerging markets or with women founders do not experience the same investment gains.
Method
This quantitative study uses application and follow-up data from a global sample of 1647 entrepreneurs who applied to 77 impact-oriented accelerators from 2013 to 2016 to assess the effectiveness of entrepreneurial support at the early stage. By constructing a dataset with pre-acceleration venture characteristics, performance metrics, and founder background, this research investigates how accelerator participation affects the level of equity investment in the follow-up year.
Key Findings
Accelerator program participants attract a significant flow of equity investment funds.
53% of prior-year equity investment carries over into the next year.
Accelerator participants get an additional $13,176 in equity investment.
The positive effect of accelerator participation on equity investment is tied to the number of accelerated months in the follow-up year.
Participants see a significant boost of $3,815 in investment for every month they are enrolled in or have finished the accelerator program.
Investment levels tend to decline slightly outside the accelerator program (a modest drop of $287 per month), this effect is minimal.
However, the equity investment effect does not extend to ventures working in emerging markets and those with women on their founding teams.
Ventures working in emerging markets don’t get more equity in their follow-up year compared to those working in emerging markets.
The presence of a woman on the founding team is associated with a decrease in equity investment by $12,470.
Takeaways
While accelerators have demonstrated a positive impact on attracting outside equity investment, these benefits are not equitably distributed. This research suggests that ventures operating in emerging markets and those founded by women are not experiencing the same level of capital flow. This disparity underscores the need for a more nuanced understanding of the factors influencing accelerator effectiveness.
The mixed findings highlight the need for further research to understand how accelerator programs can better support women entrepreneurs and ventures in emerging economies. It remains unclear which specific elements of the accelerator program are most effective in securing additional equity investment for overlooked entrepreneurs.
References
Lall, Saurabh A., Li-Wei Chen, and Peter W. Roberts. 2020. "Are we accelerating equity investment into impact-oriented ventures?." World Development 131: 104952.
About WIN-VC Canada:
New Power Labs is the research lead of the Women and Nonbinary (W) Impact (I) Network (N) for Venture Capital (VC), a national collaborative of organizations working to provide services, programming, events, and dedicated resources to women and non-binary entrepreneurs and gender lens investors across Canada who are working towards becoming investment ready and increasing the pool of investors driven to invest in these ventures.
This research is part of WIN-VC Canada, supported by the Government of Canada. WIN-VC acknowledges the support of Innovation, Science and Economic Development (ISED). ISED has awarded funding for WIN-VC that will make the venture capital environment more inclusive for women by transforming traditional investment processes, processes and knowledge into respectful and meaningful approaches that value equity and impact with a focus on diverse women and non-binary entrepreneurs and SMEs including Black communities, Indigenous peoples, racialized populations, persons with a disability, 2SLGBTQ2+ and new Canadians.
