Does Acceleration Work?

Five years of evidence from the Global Accelerator Learning Initiative

May 2021

For the past five years, GALI has been collecting data on accelerators around the world and the entrepreneurs who seek their support, with a particular focus on accelerators operating in developing economies. By analyzing these data and interviewing dozens of individuals about their experiences with acceleration, the project has been able to release over 30 publications on acceleration and early-stage entrepreneurship. This report serves as a synthesis of the most salient findings from this research, with actionable insights for accelerator program managers, entrepreneurs, funders, investors, and other stakeholders who support and engage accelerators around the world.

This report is available in English, Spanish, and Portuguese.

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Key Takeaways:

  • The accelerator model emerged in 2005 in the United States and has since spread worldwide. Accelerators are unique from other entrepreneur support programs in their cohort-based, time-limited, and investment-focused support. The term “acceleration” has become an umbrella term for a variety of programs that serve different goals and stakeholders.
  • On average, ventures that participate in accelerators increase revenues, number of employees, and outside investment by greater margins than those that applied but were rejected. These benefits come from a combination of accelerators’ ability to select high-potential ventures, provide a market signal of the quality of these ventures, and provide programming that helps the ventures grow.
  • However, accelerator impact varies considerably program-to-program. The investment benefits of acceleration are concentrated among ventures in high-income countries, whereas ventures in low- and middle-income countries see more benefit in terms of revenue growth. There is no one specific “recipe” for acceleration services that make a successful program, but evidence points to the importance of tailored support, peer learning, and localization of service models.
  • Not all entrepreneurs benefit from acceleration in the same way. All-men founding teams raise more investment than all-women teams, and expatriate entrepreneurs in developing economies are more likely to access grant financing than local founders.

Insights for Accelerators:

  • It is important to adjust the elements and content of your programming to match the local ecosystem – the Silicon Valley blueprint will not work everywhere. For example, in an ecosystem with little early-stage venture capital, traditional demo days are unlikely to lead to funding for ventures, and alternative approaches to investment facilitation need to be considered.
  • Funding for your program will be difficult, and some support from donors or government will likely be at least part of the mix.
    Funding through returns on equity taken from participating ventures, a model that has worked in the U.S., is being tried elsewhere (for example, by Flat6Labs in Egypt) but has yet to prove its ability to provide enough capital to keep programs in business.
  • While your training curriculum is important, it is just as essential to consider how you are facilitating networking and mentorship among program participants. This is important not only in terms of designing your activities but also in selecting a cohort that can benefit from transparent and collaborative peer interactions.
  • Consider how your processes may contribute to biases, in particular against women and local founders. You can check out guides and reports on incorporating gender equity into program design from Impact Hub and Frontier Incubators.
  • Clearly define your value-add and what you hope to accomplish. The distribution of outcomes among your ventures will likely be very skewed and concentrated among a relatively small group, and so trying to do and be everything for everyone is unlikely to work.

Insights for Entrepreneurs:

  • Consider exactly what you hope to get out of an accelerator program before applying, and then select programs that match your stage and needs.
  • Look at the types of ventures and entrepreneurs that have participated in the program, and make sure these are the types of peers you would want to connect with, engage with, and learn from.
  • Consider attending multiple programs if these programs are clearly designed to solve different problems at different stages of your venture’s lifecycle.
  • Keep in mind that the growth benefits of accelerator programs tend to be gained by a relatively small number of participants and set your expectations accordingly – though the ability to help you fail faster may also be a benefit.
  • If you are in a location with limited early-stage funding, participation in an accelerator alone is unlikely to fully alleviate this constraint, and it is important to consider whether the program provides funding directly or how it connects ventures to investors.

Insights for Donors and Policymakers:

  • Accelerators are, on the whole, effective ways to support high-growth ventures, but financially sustaining an accelerator in a nascent ecosystem is difficult, and so donor or government support may be necessary. This support is particularly useful when it is flexible and avoids imposing additional constraints and burdens on the accelerators, which can make it more difficult to be reactive to entrepreneurs’ needs.
  • Accelerators on their own cannot solve the many constraints in nascent entrepreneurial ecosystems. While accelerators can be an effective way to spur growth among the highest-potential ventures, they are not replacements for broader business support programming and policies intended to provide across-the-board benefits to small and medium-sized enterprises.
  • Do not assume that acceleration will benefit all types of entrepreneurs equally. If you are interested in supporting underrepresented entrepreneurs, probe into how the acceleration model is being developed to address the specific needs of these groups.
  • There is no one-size-fits-all “recipe” for an effective accelerator program, and it is more important to consider how the elements of the program match the needs of the targeted entrepreneurs and the realities of the local ecosystem.

Insights for Investors:

  • If you are engaging with accelerators – for example, by attending a demo day – be clear upfront about the profile of the entrepreneur you are realistically likely to invest in. For entrepreneurs in nascent ecosystems in particular, it can be frustrating to spend time engaging with investors that are not looking to develop their short-term pipeline.
  • Engage more closely with accelerators to understand their value and their ventures. Many accelerators are developing significantly more in-depth investment readiness programming, providing an opportunity to identify a more robust pipeline through close partnerships.
  • Consider alternative investment approaches that might carry more risk but also more impact. For example, Village Capital has had considerable success with a fund that guarantees investment in two ventures out of every accelerator cohort based on a peer scoring system.39 Raising this fund required investors willing to take the risk of experimenting with a radically different form of investment selection, but this has resulted in returns to investors and a more diverse group of supported ventures.