Sheryl Winston Smith

Accelerators and Crowd-Funding: Complementarity, Competition, or Convergence in the Earliest Stages of Financing New Ventures?

In this study, we examine the evolving role and dynamic impact of early-stage accelerators in the broader funding ecosystem available to entrepreneurs. We have assembled a unique, hand-collected data set that triangulates from a variety of sources to trace the trajectory of start-ups as they proceed through the early stages of outside financing. We pay particular attention to founding firm and founding team attributes, early stage investor roles, and full financing details. Our primary data sources for this study include Crunchbase, Thomson One’s VentureExpert, and LinkedIn. We track the universe of start-ups that participated in the Y Combinator and TechStars accelerators and a complementary sample of start-ups backed by angel investors over the period 2005-2011 (n= 740 observations). Our early results suggest that accelerator-backed start-ups receive the first round of follow-up financing significantly sooner; are more likely to be either acquired or to fail; are founded by entrepreneurs from a relatively elite set of universities; and exhibit substantially greater founder mobility amongst other accelerator-backed start-ups. We then seek to compare these companies — and when appropriate link them to — new ventures that have backing from crowd-funded platforms. By doing this, we are able to hone in on several key facets known to impact entrepreneurial outcomes such as survival and growth: founder background and experience, the role of the networks and interconnections, and the nature of the business idea.

Beg, Borrow, and Deal? Entrepreneurs’ Choice of Financing and New Firm Innovation

Entrepreneurs rely on a spectrum of financing options for new companies. I analyze two key aspects: the role of debt and bank loans in the early financing of new firms and the relationship between financing choice and subsequent innovation trajectory. I use microdata in the confidential Kauffman Firm Survey (KFS) dataset. The results suggest bank loans play a role in early stage financing in firms across a spectrum of high-technology industries. Second, conditional on the initial financing mix I use a two-stage analysis to probe the relationship between financing and innovation. In a novel strategy, I exploit the role of entrepreneurial optimism to discern the relationship between debt financing and innovation outcomes, conditional on the endogenous choice of financing.