Startup Employees’ Career Paths and Business Accelerators

Abstract

Entrepreneur support and training programs have become common solutions to the challenges startups face, particularly gaps in managerial and entrepreneurial skills. While traditional group training shows modest results, more targeted approaches like business accelerators have been shown to significantly impact startup growth. As startups play a crucial role in job creation, these programs are seen as key drivers of economic recovery and inclusive growth, improving workers' living standards. However, despite the focus on entrepreneurship as a job creator, there is limited research on the long-term effects of startup employment, especially for employees of accelerator-backed firms, due to data constraints. This paper takes an initial step in analyzing the effects of business accelerators on startup employees' careers using two approaches. The first is a macro analysis that employs novel text-based methods to examine the types of job positions held by workers in a large sample of accelerator participants and control firms across the Americas. The second approach is a micro-level analysis that leverages quasi-experimental variation in participation in the Colombian ValleE accelerator, using official employer-employee linked wage data from Colombia's payroll tax and social security contribution registry. Our findings show both short- and long-term positive effects on employee wages, even after they leave their jobs at the accelerated firm. These wage gains are linked to employees assuming new managerial and entrepreneurial roles or moving to larger companies. The wage differences cannot be fully explained by accelerators selecting firms with employees at pivotal career stages. Instead, evidence suggests that accelerator participation directly influences employees' career trajectories. Several factors contribute to this effect, including the businesses’ acceleration providing opportunities to learn about new skills and develop them, as well as offering a form of certification that enhances market value. Consistent with the skill hypothesis, we observe significant shifts in the skills (cross-functional), knowledge (communications and business management), and abilities (cognitive) required in the career paths of workers in accelerated firms.