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The role of accelerator programmes on the capital structure of start-ups

Venâncio, Ana and Jorge, João Maria LU (2021) In Small Business Economics
Abstract
Several factors affect the capital structure of start-ups. In this study, we compare the capital structure choices of accelerated and non-accelerated start-ups to evaluate the role of accelerated programmes on the capital structure decisions for startups. Using a comprehensive database provided by Emory University, we find that accelerated start-ups have higher external equity ratios than non-accelerated start-ups, after accounting for firm-specific differences and unobserved start-ups factors, particularly when the economic conditions deteriorate. We also confirm that accelerated start-ups raise more funding through philanthropic investors, but this effect disappears when we control for firm fixed effects. These results suggest that... (More)
Several factors affect the capital structure of start-ups. In this study, we compare the capital structure choices of accelerated and non-accelerated start-ups to evaluate the role of accelerated programmes on the capital structure decisions for startups. Using a comprehensive database provided by Emory University, we find that accelerated start-ups have higher external equity ratios than non-accelerated start-ups, after accounting for firm-specific differences and unobserved start-ups factors, particularly when the economic conditions deteriorate. We also confirm that accelerated start-ups raise more funding through philanthropic investors, but this effect disappears when we control for firm fixed effects. These results suggest that accelerators provide informative signals about the quality of the venture, albeit only to external equity investors, and particularly during recession periods. Our findings have implications for a better understanding of the role of asymmetric information and business cycles in capital structure decisions for accelerated start-ups. (Less)
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author
and
publishing date
type
Contribution to journal
publication status
epub
subject
keywords
Capital Structure, Accelerated Programmes, start-ups, Venture finance, debt, external equity, philanthropic capital
in
Small Business Economics
publisher
Springer
ISSN
0921-898X
DOI
10.1007/s11187-021-00572-8
language
English
LU publication?
no
id
79674049-e621-4ee3-946e-16fe988dce2b
date added to LUP
2021-11-25 10:32:19
date last changed
2021-11-25 10:55:51
@article{79674049-e621-4ee3-946e-16fe988dce2b,
  abstract     = {Several factors affect the capital structure of start-ups. In this study, we compare the capital structure choices of accelerated and non-accelerated start-ups to evaluate the role of accelerated programmes on the capital structure decisions for startups. Using a comprehensive database provided by Emory University, we find that accelerated start-ups have higher external equity ratios than non-accelerated start-ups, after accounting for firm-specific differences and unobserved start-ups factors, particularly when the economic conditions deteriorate. We also confirm that accelerated start-ups raise more funding through philanthropic investors, but this effect disappears when we control for firm fixed effects. These results suggest that accelerators provide informative signals about the quality of the venture, albeit only to external equity investors, and particularly during recession periods. Our findings have implications for a better understanding of the role of asymmetric information and business cycles in capital structure decisions for accelerated start-ups.},
  author       = {Venâncio, Ana and Jorge, João Maria},
  issn         = {0921-898X},
  language     = {eng},
  month        = {11},
  publisher    = {Springer},
  series       = {Small Business Economics},
  title        = {The role of accelerator programmes on the capital structure of start-ups},
  url          = {http://dx.doi.org/10.1007/s11187-021-00572-8},
  doi          = {10.1007/s11187-021-00572-8},
  year         = {2021},
}