Long-term impacts of startup accelerators

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School of Business | Master's thesis
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Date

2018

Department

Rahoituksen laitos

Major/Subject

Mcode

Degree programme

Finance

Language

en

Pages

48 + 5

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Abstract

BACKGROUND AND OBJECTIVES OF THE STUDY Over the past decade startup accelerators have become key players in startup ecosystems. The first modern type startup accelerator was founded in 2005. Due to the novelty of this phenomenon, there has been only very little academic literature on the long-term impacts of startup accelerator programs. This thesis studies companies that have completed startup accelerator programs at the time they get acquired. The study offers relevant insights for both entrepreneurs considering participating in accelerator programs and for corporations that consider partnering with accelerators or acquiring one of their portfolio companies. DATA AND METHODOLOGY This study uses a novel data set collected from public online startup databases such as Crunchbase. The data set covers startups that were acquired by a public U.S. based company between August 2006 - April 2016 and had participated at least in one startup accelerator program. For a startup accelerator to be included in the sample, it must be a for-profit organization and have had at least on exit where the portfolio company was acquired by a public company. The ’accelerated’ startups were matched with a similar company that was acquired to compare the differences in the acquisitions. Furthermore, I categorize the startup accelerators in the sample in two groups based on their size and performance to study the impact of the quality of the accelerator programs. FINDINGS OF THE STUDY I find that abnormal stock returns around the announcement date are higher when the acquisition target is a startup accelerator backed company rather than a company backed only by regular venture capital investors. Further comparative analysis shows that ’accelerated’ companies get acquired signicantly younger than their peers. The results also suggest that these differences hold when most prominent accelerators with most success are excluded from the sample. However the companies accelerated by the most prominent accelerators seem to have much more success in terms of attracting investors and raising funding.

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Thesis advisor

Puttonen, Vesa

Keywords

startup, startup accelerator, venture capital, acquisitions

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https://urn.fi/URN:NBN:fi:aalto-201806293979

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[gradu] Kauppakorkeakoulu / BIZ