This week, Sabrina Howell from New York University will be presenting her new work, “Very Early Venture Finance: A Causal Evaluation of Accelerators, Business Plan Competitions, and Judges’ Predictive Power.” As it’s still in its early stages, there is no paper yet. However, provided below is the abstract:
Business plan competitions and accelerator programs are new but ubiquitous features of the entrepreneurial financing landscape. These programs might reduce investor-entrepreneur search costs. Alternatively, the resources provided to winners and participants may be helpful. This paper explores these mechanisms with comprehensive application and scoring data on over 3,500 firms competing in 88 events in 12 states. Preliminary results suggest that winning a competition has a strong positive effect on subsequent fundraising, but accelerator participation does not measurably help. The opportunity to pitch is more helpful than in-kind services. Conditional on win status, overall scores and criteria scores are weakly predictive. Entrepreneur judges predict success better than investor judges, and both do better than executive or service sector judges. No criterion score (e.g. team, technology, business plan) is especially predictive. Ongoing work explores whether startups benefit from receiving structured feedback, and in particular whether startups that receive negative feedback fail faster than they would in the counterfactual.
This week in our reading seminar, we will be reading Petra Moser and Tom Nicholas’s “Prizes, Publicity, and Patents,” and Gary King’s latest critique “Why Propensity Scores Should Not Be Used for Matching.”
Last week we heard from Julia Lane who described all her amazing work linking administrative university data to government grants. This work will enable us to trace investment in R&D all the way from proposals through publication and patenting. Doctoral students should take note.