Start-up factories, transnational entrepreneurs and entrepreneurial ecosystems: unpacking the lure of start-up accelerator programmes

ABSTRACT

This paper examines the role of accelerator programmes in promoting transnational entrepreneurship. Designed to assist the growth of start-ups by providing seed finance and structured entrepreneurship support, these programmes are now a prominent feature in many entrepreneurial ecosystems around the world. Drawing on in-depth qualitative evidence focused on one particular programme, the paper shows accelerators play an important intermediary or ‘brokerage mechanism’ providing start-ups with enhanced relational connections and networks. Transnational entrepreneurs attracted to these programmes are highly focused on exploiting these networks whilst maintaining multiple levels of embeddedness in various contexts to maximize the opportunities afforded by accelerators. While many governments are attempting to replicate accelerators programmes within the public sector, the paper concludes that such attempts may prove problematic within weaker entrepreneurial ecosystems.

KEYWORDS:

• Accelerators
• transnational entrepreneurs
• entrepreneurial ecosystems
• networks
• public policy

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Neil Lee http://orcid.org/0000-0002-4138-7163

Notes

1 Accelerators such as Y Combinator has been labelled by some as ‘perhaps the world’s most successful entrepreneurial initiative’ (Huggins, Waite, & Munday, 2018, p. 1302).

2 There are strong parallels between the adoption of accelerators and business incubators which also originated in the private sector in the U.S. but spread widely sector across Europe in the public sector (Smith & Zhang, 2012).

3 While many are independently-owned, nearly half of all U.K. accelerator programmes are funded by corporate organizations such as the Barclays UK Fintech Accelerator (Bone et al., 2017).

4 Typically, accelerators recruit start-ups twice a year and conclude with a ‘demo day’ to enable the start-up to ‘pitch’ to an invited audience of potential investors.

5 Under this model, accelerators take a small stake in the ventures (between 5% and 7%) in return for a small equity stake in the firm (Hochberg, 2016). For example, Y Combinator takes an average of 6% equity in each start-up in return for $11,000 seed funding.

6 While none of this small cohort utilised E-2 visas, presumably TEs will be more inclined to seek E-2 type visas if they consider their migratory process to be short-lived.

7 These perceptions are also strongly apparent from start-ups who have gone through other accelerator programmes, such as Y Combinator. See: www.ycombinator.com/quotes/.

8 Indeed, scholars have noted that an over-reliance on localised embedded ties can derail the performance in some firms (Granovetter, 1973).

9 The bulk of the early literature characterises TEs as resource-dependent life-style type entrepreneurs rather than dynamic TEs (Portes et al., 2002). For example, the Vietnamese entrepreneurs examined in one recent study were predominantly service sector start-ups like nail salons, restaurants and takeaways (Bagwell, 2015). We contrast these with the TEs observed in this study in Table 2.

10 Dumb money contrasts with ‘smart money’ from equity investors owing to the advice and mentoring firms receive from venture capitalists and business angels (Riding, 2008).