Mirella Migliaccio, [email protected] Francesca Rivetti, [email protected]
University of Sannio, Department of Law, Economics, Management, and Quantitative Methods (DEMM), Benevento, Italy
Accelerating entrepreneurship via intensive learning programs
Abstract
In the last decade a new instrument aimed at stimulating entrepreneurship has emerged: the accelerator program. It addresses the need to “accelerate” entrepreneurship by conducting a very intensive program, starting with the selection of particularly promising ideas and aimed at defining business projects attracti ve to investors. A very interesting, yet barely explored aspect, concerns the learning mechanisms within these programs. On the basis of the literature on entrepreneurial learning, and knowledge management, this paper aims at identifying the learning mecha nisms and the knowledge roles within them. A longitudinal case study concerning an accelerator program operating in Italy since 2012 is conducted. The empirical analysis reveals a stratification of the mechanisms of learning, supported by different knowledge roles throughout the program. Although the limitations of the study, the results may provide a basis for future research.
Key words: accelerator programs, entrepreneurial learning, start-up, knowledge roles, learning mechanisms
1. Introduction
In the last decade the use of accelerator programs, which represent one of the most advanced tools to support and promote entrepreneurship, has quickly established. Their increasing use has not been accompanied by a significant attention from scholars. Only recently they are beginning to examine the accelerator, even using the lens of learning (e.g. Migliaccio, Rivetti, & Capasso, 2014).
Starting from the most recent studies on venture accelerators, based on a theoretical background mainly concerning learning and especially entrepreneurial learning, the objective of this paper is to investigate the accelerator programs intended as intensive programs of learning. The research questions are the following: What mechanisms of learning are found within acceleration programs? What roles of knowledge, directed to trigger and favor the learning mechanisms above, are found in the programs?
The paper is organized as follows: the second section examines the accelerator programs from the perspective of project management; the third section considers the accelerator programs using the lens of learning, with a particular focus on the dynamics of learning and the roles of knowledge; the fourth section briefly reviews the methodological path; the fifth section is dedicated to the case of study; the sixth section presents the conclusions, limitations of the study and directions for further research.
2. Acceleration programs and business projects
Venture creation is a dynamic process that can be examined by considering the behavior of individuals that contribute to it (Garner, 1985; Gartner & Carter, 2003). As pointed out by Liao and Welsch (2008), different patterns of activity, which can be carried out at different times and in a different order, contribute to venture creation. This experimental process, which involves dynamic experiential learning (Kolb, 1984), is conducted through trial and error.
Over the years various instruments to promote and support entrepreneurship have arisen, first of all incubators (Hughes et al. 2011), designed to create an environment able to stimulate and favor the entrepreneurial process and to provide services in support of it. Incubators are business support process, designed to support the development of startups by providing "services and resources tailored to young firms" (Isabelle, 2013; NBIA, 2014). More recently, programs aimed at accelerating the entrepreneurial process in the short period have been designed. Miller & Bound (2011, p. 3) point out that an acceleration program is charachterized by “an application process that is open to all, yet highly competitive; provision of pre-seed investment, usually in exchange for equity;
a focus on small teams not individual founders; time-limited support comprising programmed events and intensive
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mentoring; cohorts or ‘classes’ of startups rather than individual companies”. Although these elements may occur with different intensity, we can consider them common to all acceleration programs.
In this paper, starting from what stated by Halt et al. (2014), we consider the definition of accelerator programs provided by Migliaccio et al. (2014). In particular, acceleration programs are considered instrumental “to
“accelerate” entrepreneurship in a very limited period of time” e “to this end, it provides not only financial resources, but also services instrumental to the formation of an organizational knowledge base adequate to contribute to the success of the nascent firm and to the definition of a project that is attractive to investors (Migliaccio et al., 2014, p. 3).
The accelerator, according to its specific characteristics, contributes to the entrepreneurial process, whose output can be a new firm (Gartner & Carter 2003). The emphasis on the management of multiple business projects leads us to apply some concepts of project management. The placement of the acceleration program within the project management approach seems particularly appropriate to analyze the dynamics of learning within and between projects. We believe that the program of acceleration can be interpreted, albeit with the necessary distinctions, according what stated by Archibald (1992), who defines the program as an initiative taking place in the long term, characterized by the involvement of multiple projects. The main element of differentia tion, with respect to this definition, relates to the time. Accelerator programs are "time limited support" (Miller & Bound, 2011), generally of short duration, being aimed at accelerating the process of creation/discovery of entrepreneurial opportunities (Alvarez & Barney, 2007, 2010), interpreted as a learning process. Instead, element of strong similarity is the multiplicity of projects included in the program. In fact, among the aspects common to accelerator programs highlighted by Miller & Bound (2011), particular emphasis concerns the focus on classes of projects rather than on single projects.
3. Learning within acceleration programs
The entrepreneurial process is a learning process (Corbett, 2005). It is not only about individual learning, but also collective learning. Indeed, its effectiveness is also related to access to multiple sources of external knowledge and therefore to the transfer of knowledge which fuels the knowledge base of the nascent firm. For the purposes of entrepreneurial learning are important not only psychological characteristics and skills of the individual, but also the creation of an environment that encourages it (O'Shea & Buckley, 2010). An accelerator program helps to create virtuous learning contexts based on the positive relationship knowledge - trust, which feed on each other, and become ecosystems (Miller & Bound 2011). During the program, the process of entrepreneurial learning is accelerated (Miller & Bound, 2011). To this end, as highlighted by Migliaccio et al. (2014 ), “are provided, among others, services instrumental to the formation of a knowledge base of the nascent firm adequate to favor the success of the initiative”, especially through didactic modules, completion of the team and networking.
The accelerator favors entrepreneurship by performing the functions of educator, connector and validator (The World Bank, 2011), which can be considered in a knowledge-based view, in order to appreciate their contribution to the knowledge base of the nascent firm. The function of “educator” is especially instrumental to the promotion of experiential learning; the function of “connector” favors learning by interacting; the function of “validator” “is mainly due to the mentorship and to the creation of an environment favoring the emergence of start-ups”
(Migliaccio et al., 2014).
The learning peculiarities within the programs of acceleration are closely related to the characteristics of the organization that manages them and the specific objective to be achieved. With regard to the first aspect, upstream of the acceleration program often there is an organization that has a stable core and leverages an extensive network of partners, whose composition of which is subject to variations from year to year. This certainly impacts on accessible knowledge. In addition, for the effectiveness of knowledge transfer, it is necessary to develop learning mechanisms independent from the composition of the participants and to ensure appropriate roles of knowledge.
On the other hand, as shown in project management literature, these requirements are found in all projects, complex works that are characterized by high novelty, whose realization involves different parties, who often work for the first time together. The objective can be identified by considering the point of view of the organization or that of
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the entrepreneurial teams participating to the program. The team aims to overcome the validation phase, becoming graduated and then making the nascent firm attractive to investors. It should be n oted that not all the teams arrive at the graduation and even fewer are funded by investors. In addition, still remains, albeit to a lesser extent, the risk of failure of startups (Miller & Bound, 2011). In case of failure, however, knowledge resulting fro m the process of entrepreneurial learning can be used in other entrepreneurial initiatives. As for the accelerator, the organization behind the program, the main objective is the return on investments. Moreover, the program offers benefits in terms of learning also for the accelerator, and new knowledge can be reused in new programs.
Learning takes place through mechanisms stressing the collective dimension and is facilitated by multiple roles of knowledge. Regarding the mechanisms, experiential learning, the individual and team level (Kayes, Kayes,
& Kolb, 2005) is combined with the non-experiential learning (Zollo & Winter, 2002), which is achieved through the articulation and the codification of knowledge, mechanisms "that go beyond the semi -automatic processes of stimulus-response and the accumulation of experience" (Zollo & Winter, 2002, p. 341).
The entrepreneurial team is the main locus of entrepreneurial learning. The accelerator creates the conditions for the team evolve into a community of practice (Wenger, 2000); it also ensures the conditions favoring mechanisms of learning, supported by specific roles of knowledge (Davenport & Prusak, 2000). Scholars propose different knowledge roles, each of which supports specific learning mechanisms (e.g., knowledge gatekeepers, facilitators, etc.).
One of the most important figures for the transfer of knowledge, mostly abstract, it is the teacher (Drucker, 1999) (often a university professor or a professional). As regards the other roles of knowledge, with refe rence to the knowledge facilitator, in this paper we consider the definition of Roth & Styhre (2002, p. 1), which identify him as an individual who helps a community of practice (for instance a new product development team) to codify, decodify, articulate, express, and tell stories about their skills, experiences, know-how, capabilities, in brief their knowledge of certain areas”, laying the basis for overcoming the "knowing-doing gap" (Roth & Styhre, 2002), thus promoting the launch of the entrepreneurial initiative. Instead, the knowledge gatekeeper is identified as “an individual who acts as a knowledge interface” (Cranefield & Yoong, 2006, p. 233) between the organization and external sources of knowledge which are found in his network.
4. Methodology
To address the research questions, we decided to conduct a longitudinal case study (Yin, 1994), referring to an acceleration program operating in Italy since 2012, with reference to the period 2012-2014. The program was chosen since it seemed particularly appropriate with respect to the phenomenon under investigation.
Different research methods were taken into account, and in particular (Woodside, 2010): semi -structured interviews, analysis of documents and non-participant observation.
5. The case of study
SeedLab is an acceleration program established in 2012 and currently promoted by TTVenture, closed -end fund with headquarters in Milan. It focuses on the pre-seed stage of entrepreneurial projects focused on different areas (web, biotech, new materials, cleentech, life-science, agrofood), with a particular emphasis on technology transfer, which have in common the possibility of exploitation of the technology.
The program is characterized by a careful initial selection of entrepreneurial projects and is d esigned to validate them. At least in the early stages the program is characterized by a remarkable fluidity of the team, which are then stabilized, and a climate favoring the creation of relationships with external subjects, in particular industry experts and potential partners.
In detail, it is possible to identify two modules (one didactic and the other of incubation), following the initial selection. The didactic module, which aims to provide the basis of enterprise management, is designed also to encourage interaction with teachers and among aspiring entrepreneurs. The incubation module is designed in order to define in detail the project in a climate of interaction and cooperation with the mentors and external parties.
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The program is completed with a pitch day, during which the projects are presented to investors, institutional or not, who evaluate the opportunity to invest in them. Among graduated teams, then, are selected those whose projects seem of considerable interest, in order to spend some months in Silicon Valley to improve their entrepreneurial projects.
FIG. 1 THE SEEDLAB ACCELERATION PROGRAM (SOURCE: SEEDLAB, 2013)
With regard to the first research question, considering the learning mechanisms defined by Zollo and Winter (2002) and applied to projects by Prencipe and Tell (2001), it is possible to identify the activities that, in the SeedLab program, tend to favor them (Table 1).
TABLE 1: LEARNING ACTIVITIES AND MECHANISMS WITHIN THE ACCELERATION PROGRAM
Learning activities (Prevalent) learning mechanism
Training on the job, incubation activities Experiential learning
Networking Knowledge articulation
Planning Knowledge codification
Experiential learning is promoted especially by training on the job, through which teams are assisted by mentors in carrying out activities related to the definition of the project, and by incubation activities, instrumental to "address open issues of the project to define an effective and credible business model" (Migliaccio et al., 2014). Knowledge articulation is accomplished through interaction within the team, with the mentor, the other teams and with others involved in the acceleration program; in fact, even the didactic module is designed in such a way as to encourage not only lectures, but also networking among program participants and between them and the teacher. Finally, knowledge codification takes place especially during incubation, when the teams are dedicated to planning.
Considering the practice-oriented categories of knowledge (Savage, 1996) most commonly used in studies on entrepreneurial learning (Williams Middleton & Donnellon, 2014), we can examine how the program favors their acquisition (Table 2).
TABLE 2: LEARNING ACTIVITIES AND KNOWLEDGE CATEGORIES
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Learning activities Knowledge categories
Lectures, training on the job Know what
Lectures, training on the job, pitch Know why Lectures, training on the job, incubation activities Know how
Know what is vehicled mainly by teaching, placed mostly in the first part of the program, and by training on the job, through the mentor. The team acquires the know-why even during the pitch day. Finally, know-how is developed thanks to lectures, training on the job and the various activities implemented during incubation, instrumental to the development of plans. In addition, the three categories of knowledge considered here, and especially the know- how, can be developed through experience (Kolb, 1984).
Turning to the second research question, it can be noted that the acceleration program involves different actors performing knowledge roles. Teachers, active especially in the first module, serve as educators, being responsible for the transmission of knowledge to individuals belonging to entrepreneurial teams. The teacher acts primarily on the transfer of abstract knowledge, that is entrepreneurial know-what (Gartner & Carter, 2003).
Mentors tend to perform more than one knowledge role. First, they are "knowledge gatekeeper" (Cranefield
& Yoong, 2006), since they relate the team with external sources of knowledge that are part of their web of relations;
in this way, while not triggering a particular mechanism, they create the conditions so that the team learns from external sources. In addition, they act as "knowledge facilitators"; in fact, assisting the team in translating its ideas in the project, they ensure the articulation, sharing and proper application of knowledge transmitted by the teacher and pre-existing knowledge. In this way, they operate downstream of the transfer process, favoring the overcoming of "the 'knowing-doing gap'" (Roth & Styhre, 2002, p. 1) by applying knowledge to the plans; therefore, they favor the articulation as well as the codification of knowledge. Even business students operate during the program as
"knowledge facilitators", although, compared to the mentor, they have a different role, mainly oriented to the application of the acquired and pre-existing knowledge to the project.
6. Conclusion
Accelerator programs constitute a particularly effective instrument to support entrepreneurship. A very interesting aspect, barely explored by scholars, concerns the learning dynamics that are developed within these programs. In fact, beyond the aspects concerning the financial support and the validation of business ideas, it should be emphasized that accelerator programs are intensive programs of learning. Its functions of educator and a connector, highlighted by scholars along with that of validator (The World Bank, 2011), can be reconsidered in this perspective.
On the basis of the literature on entrepreneurial learning and knowledge management, this paper identifies the learning mechanisms and the knowledge roles directed to trigger and favor these mechanisms within the programs of acceleration. We have developed the empirical analysis with reference to SeedLab, an acceleration program operating in Italy since 2012. With regard to the first research question (What mechanisms of learning are found within acceleration programs?), the empirical analysis reveals a stratification of learning mechanisms throughout the program, although specific mechanisms prevail in specific phases. Turning to the second research question (What roles of knowledge, directed to trigger and favor the learning mechanisms above, are found in the programs?), it should be noted that different knowledge roles are employed in the context of the accelerator, some of them can be related to specific knowledge mechanisms. Some knowledge roles create the conditions for learning from external sources (mentors: knowledge gatekeepers), others act as educators (teachers), and still others favor the articulation and codification of knowledge (mentors and business students: knowledge facilitators).
The managerial implications of the paper are summarized below. Since the acceleration program is a program of entrepreneurial learning, in order to better carry out its function (effective and fast learning), it should create appropriate conditions relating to: identification, within the program, of activities instrumental in: ensuring that the teams accumulate experiential knowledge (e.g., through incubation activities), evolve into social learning systems
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(Wenger, 2000), and interact with external parties, especially those included in the network of the program; presence of qualified figures who perform knowledge roles, designed to promote directly or indirectly the mechanisms of learning.
The main limitations of the paper can be found in the impossibility to generalize the results using the method employed. The results may, however, provide a basis on which to build future research.