Giving Compass' Take:
- Matt Guttentag and Abby Davidson examine the benefits of accelerator programs and how donors should define success and contribute to program effectiveness.
- Based on these findings, how should donors tailor their support as well as expectations of accelerator programs?
- Learn how accelerator and incubator programs are adapting during the pandemic.
What is Giving Compass?
We connect donors to learning resources and ways to support community-led solutions. Learn more about us.
Around the world, policymakers have been increasingly turning to entrepreneurship as an important contributor to local economic development and job creation. At the same time, the short-term, intensive training programs that help such entrepreneurial ventures scale quickly— business accelerators—have become popular not just in Silicon Valley, but also across developing economies.
With the growing interest in accelerators came questions about their efficacy, especially in more nascent entrepreneurship ecosystems. To help answer them, the Global Accelerator Learning Initiative (GALI)—a collaboration between the Aspen Network of Development Entrepreneurs (ANDE), where we work, and Emory University—tracked more than 23,000 ventures going through accelerator programs around the world over five years. With GALI's data joining other emerging research, donors, governments, and social sector organizations are in a better position than ever to make a decision about their involvement with accelerators.
Donors interested in working with accelerators must consider a number of factors, such as expected outcomes, the type of acceleration model, and how to structure support.
GALI's findings suggest that donors should not measure accelerator effectiveness according to the same set of outcomes as more general support programs for small and medium enterprises (SME). SME interventions generally aim to boost a broad set of businesses, and this benefit is ideally gained by all of the participants. However, GALI data show that accelerators are much better at giving a more significant boost to a much smaller set of ventures with the highest growth potential. Some participants may not see benefits at all, and some may even fail faster due to quicker market testing, which is a useful though painful result. Donors should keep this in mind and not only look at the average amount of financing or venture growth across a cohort—they should examine the proportion of participants reaching some financing or growth milestone.
Read the full article about how to make the most out of business accelerator programs for development by Matt Guttentag and Abby Davidson at Stanford Social Innovation Review