Accelerator-mediated access to investors among early-stage start-ups

We study start-up accelerators, a new type of entrepreneurial support organization characterized by its coaching of regular cohorts of startup founders, that developed rapidly after pioneer accelerator Y-Combinator, founded in 2005, had ‘accelerated’ success stories Dropbox and AirBnB among others. We suggest that accelerators can be analysed as platforms whose function is to relate start-ups and investors within entrepreneurial ecosystems. According to our analysis, leading accelerators play a mediating role in enabling entrepreneurs to attract investors with a higher profile than they would have otherwise. Using propensity score matching, we compare participants to several accelerator programs in North America with similar non-participating start-ups. We measure the prominence of their investors using their centrality in the investor-network. For several top-tier accelerators, we observe that start-ups who participated in their programs attracted higher profile investors than other similar start-ups that were not accelerated. Furthermore, among accelerators, pioneer Y-Combinator appears to benefit from a winner-takes-all effect, which is typical of platform competition: Not only do investors it connects its participant startups to appear to be of a higher profile, but it is also the only accelerator in our sample whose participants gain access to an amount of early-stage funding that is significantly higher than those raised by the control group.