Research reveals three ways they help early-stage companies achieve higher funding and survival rates.
March 12, 2024
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What role do business accelerators play in boosting the growth of early-stage companies? Accelerators provide a structured environment of mentorship, education, and resources in exchange for equity. And they work. Research involving numerous accelerator programs and interviews with various stakeholders reveals that startups in these programs typically achieve higher funding and survival rates. Three key strategies identified for their effectiveness include compressed advice, which offers intensive mentorship and customer feedback to refine business strategies quickly; friendly sibling rivalry, encouraging open sharing and competition among startups for accelerated learning and execution; and schedule transitions, enforcing structured developmental activities to balance broad learning with focused execution. These strategies, effective in the high-paced startup environment, are also applicable to broader organizational contexts for driving innovation and growth.
Business accelerators, often termed “startup accelerators” or “startup factories,” are organizations dedicated to fostering the rapid growth of early-stage companies. Typically operated by investors, corporations, or independent entities, they offer structured programs that usually span three to four months, providing selected startups with a combination of mentorship, educational workshops, networking opportunities, and often a modest amount of capital and office space. In exchange for these resources, accelerators usually require a small percentage of equity in participating startups.
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Susan Cohen is an associate professor at the Terry College of Business at the University of Georgia.
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Benjamin Hallen is the Dempsey Endowed Professor in Strategy and Entrepreneurship at the Foster School of Business, University of Washington and an associate editor at the Strategic Management Journal.
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Christopher Bingham is the Phillip Hettleman Distinguished Professor of Strategy and Entrepreneurship at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.
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