Accelerator programs and the Regional Supply of Venture Capital Investment

We examine the impact of seed accelerator programs-fixed-term, cohort-based educational and mentorship programs for startups-on the seed and early stage financing ecosystem of the regions in which they locate. We use a difference-in-differences approach that utilizes the staggered introduction of such programs, combined with matching methods and synthetic control methodologies, to assess the impact of an accelerator’s arrival on the number and a volume of early stage VC deals completed and the number and nature of new investor groups undertaking activity in the region. The arrival of an accelerator is associated with a significant increase in the volume of seed and early stage deals, driven primarily by the emergence of new local VC firms. This increase applies to startups that did not go through an accelerator as well, and does not depend on the quality of the accelerator program. The findings suggest that the introduction of these programs may have a more general effect on the equilibrium of the regions in which they locate, rather than merely an effect of treatment on the treated, and suggests a role for accelerator programs in galvanizing latent regional interest in entrepreneurial activity.