How do non-equity instruments shape the financing paths of academic start-ups?

This study investigates the funding dynamics of academic start-ups (i.e. founded by a PhD). Using a dataset of 81 318 start-ups, including 8 065 established by academic entrepreneurs, the analysis explores their long-term financing trajectories. Academic start-ups are more likely to access grants and assistance, but do not raise more funding overall than non-academic start-ups. First funding events strongly shape subsequent financing paths, as grant-funded start-ups often face barriers in transitioning to equity-based financing. Furthermore, Government Venture Capital (GovVC) does not significantly support academic start-ups, which tend to substitute non-equity funding for GovVC. These findings underscore the need for specific support instruments – like accelerators and incubators - that provide academic start-ups not only with funding but business skills and networking opportunities to facilitate access to venture capital. This helps addressing the unique challenges of academic start-ups in later stages and enables the commercialisation of high-impact innovations with substantial societal benefits.