Driving the Net Flow of Funds

Abstract

Chapter 4 analyzed the effects that accelerators have on the short-term growth of revenues, employment, and investment. The various observations consistently show that accelerator program participation influences these commercial and investment variables. However, the final presentation indicated that these effects are uneven across programs. Therefore, the general question of whether acceleration works gives way to more specific questions about which programs and program choices deliver more attractive ratios of accelerator benefits to program costs. This chapter begins by introducing a program-level variable called the net flow of funds (NFF). The NFF variable recognizes the four ways that funds flow into early-stage ventures; they are earned, invested, borrowed, or donated. For each program, the NFF measures the average of participants’ one-year growth in revenues plus investments minus the corresponding average for ventures that were rejected. We show that accelerators vary in the extent to which their NFF exceed the per-venture costs of running programs. After isolating the programs that more than cover their reported operating costs, we describe the program-level data that will be used in the more nuanced NFF analyses presented in Chaps. 6, 7, and 8.

Appendix: EDP Program Survey

General

• What is the official name of this program?

• What is this program’s expected start date? End date?

• Roughly how many participants do you plan to accept into this program?

• Where will (most of) this program be located? City? Province or state? Country?

• Is this program formally run and co-branded with any other organizations? If Yes, please provide the name and describe the role of up to three of your formal partners.

Pipeline Development

• When do you expect program applications to Open? Close?

• Roughly how many applicants do you expect for this program?

• Does this program have an explicit geographic focus?

• Does this program have an explicit sector focus?

• Does this program have an explicit impact area focus?

• Does this program have an explicit focus on Idea-stage ventures? Prototype-stage ventures? Post-revenue ventures? Growth-stage ventures?

• Does this program explicitly encourage or give preference to Women? Youth? Minorities or typically excluded groups?

• What are the primary sources for applicants into this program? Established entrepreneurial networks? Referrals from other entrepreneurs or program alumni (i.e., word of mouth)? Direct and indirect referrals from other accelerator programs? Business plan competitions? Microfinance institutions? Universities? Corporate partners? Chambers of Commerce? Outbound marketing materials?

Selection

• Roughly how many individuals formally participate in selecting ventures into this program?

• Roughly what percentage of these selectors are female?

• Will any of the following types of individuals participate in the selection process: Experienced investors? Experienced business practitioners? Experienced entrepreneurs? Program alumni? University or college professors? Foundation or donor employees?

• What are selectors asked to emphasize as they make their selection decisions? Quality or promise of the idea? Founding team? Enterprise?

• Are any of the following steps incorporated into the selection process: In-person or telephone interviews? Pitches? Group-based exercises? Tests?

Program Structure

• The following are some of the potential benefits that are typically associated with accelerators. Please rank these benefits in terms of the emphasis that they receive in this program: Network development? Business skills development? Mentorship from business experts? Access and connections to potential investors/funders? Securing direct venture funding? Gaining access to a group of like-minded entrepreneurs?

• Roughly how much emphasis is placed on each of the following topic areas: Accounting? Business plan development? Finance? Human relations? Legal? Marketing? Networking? Organization Structure and design? Presentation and communication skills?

• Who is responsible for delivering these materials: Dedicated program staff? University or college professors? Consultants? Experienced business practitioners? Experienced entrepreneurs? Program alumni?

• Does this program have a structured curriculum that is distributed to participants in written or electronic form?

• In 100 words or less, describe what additional resources or services that program participants have access to. Mentors are people who serve as guides and advisors to participating entrepreneurs. Roughly how many individuals will formally participate as mentors in this program?

• Roughly what percentage of these mentors will be female?

• Will any of the following types of individuals participate as mentors: Experienced investors? Experienced business practitioners? Experienced entrepreneurs? Program alumni? University or college professors?

• Will this program provide guaranteed capital investment for some or all program participants; either directly or through a related funding arm?

• To the nearest $10K, roughly how much financial capital has been pre-committed?

• How many program participants are guaranteed to receive funding from or through this program?

• Do these guaranteed investments come in the form of: Equity? Debt? Grants?

• Are there ways that qualifying program participants might receive investments directly from this program?

• Will this program feature pitch nights or demo days that connect participants to potential investors? (Y/N)

Follow-Up

• Will this program offer any post-program services to participants?

• What services will you offer after this program is completed?

• For how long will you offer these post-program services to program participants?

• How often will you collect data from participating ventures after this program is completed?