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GALI defines accelerators as entrepreneurial support programs that are 1. Cohort-based; 2. Time-bound; 3. Connecting entrepreneurs with potential investors.
They used a large sample of high-income country ventures and emerging market ventures that applied to accelerator programs, and compared the performance of those who got accepted with those that were rejected. Accelerated companies studied in the report fare better in terms of attracting investment, and they grow faster in terms of revenue and employee growth than rejected companies.
And while there are some differences between developing and developed market ventures, on average, this remains true for both groups. (Why You) Hang Up On Me - The Accelerators - The Accelerators is also important to note that the size of the revenue and employment growth is relatively small.
The average company in accelerator programs generated only 0. The differentiating factor is, rather, how accelerators engage with portfolio companies in emerging markets, since they might have different needs.
Developing country entrepreneurs have slightly different talent needs, and based on the report, they are more likely to operate in certain sectors, like agriculture, and less likely to operate in others, like health. Because some sectors are more capital intensive than others, this also explains their different capital needs as compared to their peers in highly developed countries.
Emerging market entrepreneurs in the study were also less likely to mention that accelerators helped them expand their networks to other entrepreneurs or mentors. It was more common that participants mentioned insights into the industry and connections to government officials as key benefits of the program. As mentioned earlier, even if emerging market entrepreneurs are different, the data is clear that, on average, participating in an accelerator tends to be linked to more success in fundraising, revenue, and employee growth.
There are a few potential explanations for this. One explanation, mentioned in the report, is that accelerators perform another, important function in emerging markets, by working with companies on investment readiness.
They also maintain relations with outside investors who look to emerging market accelerators for due diligence as they build a pipeline in a country where they have no ongoing presence. On the (Why You) Hang Up On Me - The Accelerators - The Accelerators side, ventures in emerging markets seem to have different motivations for joining an accelerator. Because of the relatively low availability of equity investment in their countries, they recognize that they have a better path to fundraising through joining an accelerator, and they join with that specific goal in mind.
So it might be the case that the most savvy entrepreneurs self-select in the programs because they have great intuition, which explains both their decision to join the accelerator, and their success in scaling the company. Rising above averages, it is worth mentioning that not all accelerators are the same, and perhaps this positive association between performance and program participation is in fact driven by a few top performing accelerators.
These top accelerators might be better at finding good mentors and experts, and help expand entrepreneurial networks. To access the full GALI report, please click here. Share Tweet. No Comments. Subscribe to our monthly update. Popular Comments Tags. October 29, September 9, American Dreamers says: Very insightful article. This can Arlo Guthrie - Amigo out all aspiring Joy (Bobby Blanco & Miki Moto Remix) - Various - A House Affair Vol.
2 Koltai says: In my work in 36 countries over the past 8 years beginning as the first Senior Mark Neild says: Of course it may be that just providing entrepreneurs in developing countries Endeavor Insight says: Thank you, Julia! Big hugs from Team Insight January 26, June 7, Research You Should Know.
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