Association for Public Policy Analysis & Management

Over the last decade, business accelerators have begun to proliferate across the United States. These organizations identify, mentor, and financially support startups through high-intensity, short-term programs offered in exchange for equity in the startups. This business model offers founders the chance to rapidly grow their firms in an environment that provides support for the multitude of issues that arise when trying to launch a new enterprise. Accelerator investors benefit from taking equity in early stage companies that can pay off quickly if their programs are successful in identifying quality participants and teaching them how to effectively launch companies.

Governments at all levels have begun to notice the growth in new accelerators throughout the country. Local, state, and federal authorities are keenly interested in spurring economic development; yet, traditionally there have been few public policy opportunities to target early stage, high-growth firms. The rise of accelerators, as catalysts for high value-added ideas, offers a pathway for governments to influence innovation by supporting programs that can bring in new firms to their regions and assist in developing a thriving entrepreneurial ecosystem. However, it is not yet clear how governments can best support accelerators to spur innovation. While they have begun to experiment with providing direct financial support, a needs assessment is necessary to identify public policy interventions that would maximize the benefits accelerators provide to the broader ecosystem while mutually benefiting accelerator leaders.

In order to identify the most valuable role of public policy in supporting business accelerators, we interviewed managers and leaders of accelerators who have received awards through the U.S. Small Business Administration’s Growth Accelerator Fund Competition over the past three years. This sample allowed us to interview accelerators focusing on a range of industry fields, covering diverse geographic locations, and implementing the accelerator business model in different ways. Our qualitative analysis explores the broad challenges experienced by leaders as they have developed and refined their programs. We then mapped these challenges to traditional public policy roles and determined the appropriate government jurisdiction to explore potential policy interventions. This approach ensured that limitations in accelerator leaders’ knowledge of public policy did not limit our ability to identify potential changes to public policy that could benefit accelerators. We also asked participants to identify specific government programs and policies that have created difficulties. Ultimately, we identified a series of potential interventions at local, state, and Federal levels that could enable accelerators to be more successful in spurring innovation. The set of interventions identified address specific accelerator needs and reflect common broader business community concerns.