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Along with entrepreneurs and their startups, a high-growth, high-technology entrepreneurship ecosystem is made up of lots of different types of specialized participants. Historically, the two most important types of participants primarily provided investment. These were venture capitalists and angels. Loosely speaking, venture capitalists raise funds from outside investors and buy equity in startup companies. Angels are similar but use their own money.
In the last decade or so, some new institutional forms have emerged that specialize in the training of startup firms. These include accelerators, incubators, and hubs, as well as cofounders and seed funds. They are all now mainstays of successful entrepreneurship ecosystems. There are around 500 high-growth, high-technology firms currently listed on the New York, NASDAQ, and American stock exchanges. Each of these firms received venture capital before its initial public offering (IPO). There are also currently around 5,000 U.S firms that are actively receiving venture capital investment. These firms hope to achieve a successful “exit,” generally either an IPO or an acquisition. Behind them, there are likely somewhere around 50,000 U.S. firms that aspire to receive venture capital. Many of these firms now take advantage of dedicated training programs to improve their odds of success.
In this paper, we examine the startup training institutions in Houston, Texas, and what they are doing to open up the city’s pipeline of startup firms. Recent academic research has shown that startup training institutions can have an enormous positive effect on an ecosystem’s growth. For example, Fehder and Hochberg (2014) claim that the opening of a new accelerator program leads to a 104% increase in the number of startups receiving seed and early-stage venture capital for the first time.
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