Startup accelerators have become an essential part of the entrepreneurial ecosystem, promising to fast-track the growth of early-stage businesses through mentorship, funding, and networking. However, the effectiveness of these programs can vary significantly depending on the startup’s founding environment. In his study, “Coming from a Good Pond: The Influence of a New Venture’s Founding Ecosystem on Accelerator Performance,” Daniel C. Fehder (2023) explores how the characteristics of a startup’s ecosystem impact the benefits derived from accelerator participation.
This blog post delves into Fehder’s findings, illustrating how a startup’s pre-accelerator environment plays a critical role in determining the value it gains from an accelerator program. Using empirical data and rigorous analysis, the study uncovers key insights that challenge the assumption that all startups benefit equally from accelerator participation.
Fehder's study finds that startups from well-developed ecosystems benefit more from accelerators—this title captures that insight.
This post represents a series of articles related to a research and dissertation called “Are corporate accelerators springboards for startups: a performance analysis of the Microsoft’s and Google’s accelerated.
The Role of Ecosystem in Accelerator Success
Fehder’s research highlights that not all startups experience the same level of success after participating in an accelerator program. The startup’s founding environment—defined by the availability of resources, networks, and capital—significantly influences the outcomes of accelerator admission.
Key factors that shape accelerator effectiveness include:
- Resource Abundance: Startups from resource-rich ecosystems gain more from accelerator programs because they can better leverage the mentorship and networking opportunities.
- Home Bias Effect: Local startups often experience greater success due to stronger regional support and networking benefits.
- Ecosystem Disparities: Startups from weaker ecosystems may struggle to translate accelerator participation into long-term success due to limited access to follow-on funding and market opportunities.
Methodology and Data Analysis
Fehder employs a regression discontinuity framework to compare startups that were accepted into a top-tier accelerator program (MassChallenge) with those that narrowly missed admission. This approach ensures that any observed differences in performance are due to the accelerator experience rather than inherent startup quality.
Data Breakdown
The study analyzed startups based on their pre-accelerator ecosystem, categorizing them into high-resource environments and low-resource environments. The following table presents a comparative analysis of startup performance metrics based on ecosystem type:
| Metric | High-Resource Ecosystem | Low-Resource Ecosystem |
|---|---|---|
| Revenue Growth Rate | 45% | 27% |
| Follow-on Funding ($M) | 5.3 | 2.1 |
| Employee Growth Rate | 60% | 35% |
| Accelerator Impact Score | High | Moderate |
Key Findings
The study presents several key takeaways regarding the effectiveness of accelerators based on the startup’s ecosystem.
1. The Impact of Local vs. Non-Local Startups
Fehder identifies a home bias effect, where startups from the same region as the accelerator tend to perform better than those from distant locations. This effect is attributed to local startups having pre-existing connections and familiarity with the regional business landscape.
2. The Unequal Benefits of Accelerator Participation
Accelerators are more beneficial for startups originating from well-developed entrepreneurial ecosystems. These startups already have access to additional capital and expertise, allowing them to maximize the resources provided by the accelerator.
Conversely, startups from underdeveloped ecosystems struggle to sustain post-accelerator momentum. Without sufficient local investment and market infrastructure, their chances of long-term success diminish.
3. Follow-On Investment Disparities
Access to post-accelerator funding is significantly influenced by the startup’s ecosystem. The following table illustrates the difference in follow-on funding received by startups based on ecosystem type:
| Ecosystem Type | % of Startups Receiving Follow-On Funding |
| High-Resource Ecosystem | 78% |
| Low-Resource Ecosystem | 42% |
Conclusions and Final Thoughts
Fehder’s research challenges the one-size-fits-all perception of startup accelerators. While accelerators can be powerful tools for growth, their effectiveness is not uniform across all startups. A startup’s ecosystem plays a crucial role in determining whether it can fully capitalize on the accelerator experience.
Startups from resource-rich environments benefit more from accelerator participation due to better infrastructure, networking opportunities, and funding accessibility. In contrast, those from weaker ecosystems may find it difficult to sustain growth despite initial accelerator support. This highlights the need for tailored accelerator strategies that address the specific challenges faced by startups from different backgrounds.
Fehder’s study provides a critical perspective on the role of startup ecosystems in shaping accelerator success. Entrepreneurs must consider not just the prestige of an accelerator program but also their own ecosystem’s ability to sustain growth post-acceleration. By understanding these dynamics, both startups and accelerator managers can optimize strategies for greater long-term impact.
FAQ
No, the effectiveness of an accelerator depends on the startup’s ecosystem. Businesses from resource-rich environments benefit more compared to those from weaker ecosystems.
Startups that operate within the same region as the accelerator often perform better due to the home bias effect, which provides them with stronger local networking and resource advantages.
Limited access to follow-on funding, a smaller talent pool, and weaker networking opportunities make it difficult for startups from low-resource environments to sustain post-accelerator growth.
While accelerators can provide valuable mentorship and resources, additional support in the form of regional investment and infrastructure development is necessary to ensure long-term success for startups from weaker ecosystems.
Startups should evaluate their local ecosystem, funding availability, and networking opportunities. If these factors are weak, additional strategies should be in place to maximize accelerator benefits.
References
- Fehder, D. C. (2023). Coming from a good pond: The influence of a new venture’s founding ecosystem on accelerator performance. Administrative Science Quarterly. https://doi.org/10.1177/00018392231204839
