[Warning: academic jargon ahead…]
I’m earning a Master of Social Science degree from the University of Colorado Denver’s Interdisciplinary Studies Program. I plan to defend in July of 2015.
My thesis explores how technology accelerators provide social capital to entrepreneurs, and what impact that social capital has on those entrepreneurs.
Selling Social Capital: How Accelerators in the United States Sell Social Capital to Technology Entrepreneurs
What I’m researching and writing about:
For as long as people have been starting businesses in the United States, they have also used their family, friends, and people in their community in order to grow those businesses. Business owners call on favors from friends, they partner with another business, or they ask for referrals to new customers. These methods are considered the use of social capital. In the same ways these business owners might employ social capital, entrepreneurs in the technology startup world are doing the same to grow their startup companies.
While financial capital, such as a business loan issued by a bank, is necessary to start a business, it is social capital that seems to be critical in starting tech companies. It is so critical, in fact, that entrepreneurs are willing to buy it. One way they can buy social capital is by applying to and going through what’s called a startup accelerator. Think of accelerators as intensive “schools” for startup entrepreneurs. Entrepreneurs accepted into an accelerator don’t usually pay cash, such as tuition, to be involved, but instead give a portion of their company, called equity, to the accelerator. In return, an accelerator typically helps a company build its product, obtain financial funding and employees, and provides access to high-profile mentors and a wide and varied social network. In this way, accelerators sell social capital, and entrepreneurs buy it.
When I refer to entrepreneurs, I mean technology entrepreneurs who are building technology-based products or services, such as software, software as a service, applications for smart phones, smart hardware, or robotic devices. When I refer to social capital, I mean the ways that entrepreneurs use mentors, social networks, and trust, as they grow their business.
The key research questions I’m exploring:
How do accelerator organizations provide access to social capital to the tech entrepreneurs that are accepted into accelerator programs? And how does that social capital contribute to the success of an entrepreneur’s company?
So, who really cares whether accelerators provide social capital? And who cares if social capital makes an entrepreneur successful? At the very minimum, it’s important to suss out whether the accelerator industry is actually doing the thing it promises to do. But the research will move beyond this to uncover whether social capital is instrumental in how tech entrepreneurs can be successful. The beauty of this study is that it can have a practical impact: people who operate accelerators can use this research to improve their programs. It will illuminate best practices—for example, how the programs can better market themselves, how to appeal to more entrepreneurs, and how they can provide measurable social capital value. This research can also impact entrepreneurs, as it will showcase to them why an accelerator is—or isn’t—valuable.
But it isn’t helpful only to accelerators and entrepreneurs. It could also help the broader industry of technology. Many leaders in the tech startup community claim that going through an accelerator is one of the best ways to grow a company. If this is true, then the more that accelerators improve their practices, the better off entrepreneurs will be in creating solutions to problems in the world. We may not need another Facebook or another photo-sharing app, but we may need technology to be applied to more critical problems. While this is clearly a big goal for my research, I don’t doubt that this study can have such a reverberating effect.
In addition to the practical impact of this work, the research will contribute to the academic scholarship about social capital theory, broadening the conversation about how tech entrepreneurs use social capital in growing their companies. There is ample research about entrepreneurs and social capital, but less research about tech entrepreneurs specifically–and even less research about tech entrepreneurs and accelerators. What little research there is on this narrow topic is working research, being conducted as I type these words. The opportunity to converse with other students and scholars working on this topic may also be a rich opportunity for my own research. In this way, I will employ my own use of social capital–something I suspect will inevitably occur throughout my research.
How I’m doing the research
The study will employ two methods—case study methodology and grounded theory methodology—using several data sources, including interviews, observations, and documents. This approach will be subjective and interpretive. Rather than answering a yes or no question, the research will look at this social phenomenon in an interpretive and comprehensive way.