Every budget cycle, ministries and agencies across India and the Gulf commission founder programs. The launch photograph is the easy part. Two years later, the question that actually matters — how many durable, investable ventures did this produce? — is often unanswerable, because nobody specified it at the start. This article sets out what a government is really purchasing when it buys an entrepreneurship program, what four decades of evidence say about which components work, and how to write a mandate that buys activation rather than announcements.
The idea in brief. A government that commissions an entrepreneurship program is buying four things: a selection filter that finds ready founders, a capability transfer that changes what those founders do, network access to capital and customers, and a signal that lowers the cost of trusting them. The evidence is clear that the first two dominate: cash and coworking alone show no measurable effect in the best-designed studies, while structured schooling, personal-initiative training and well-targeted grants produce large, lasting differences. Programs fail when they are specified by inputs (cohort size, events held) rather than outcomes with time horizons. The tender, not the curriculum, is where most programs are lost.
The announcement economy
Innovation policy has a peculiar incentive structure. The people who commission a program are judged on a political calendar; the outcomes that justify the program arrive on an entrepreneurial calendar. A minister needs something to say within twelve months. A venture needs twenty-four to thirty-six months to demonstrate that it exists in any meaningful sense — revenue, customers, a second round of capital, a payroll. The gap between the two calendars is where the announcement economy lives: programs designed to be launched, counted and reported, rather than to change what happens to a thousand founders over five years.
None of this is a criticism of ambition. The scale of public commitment to entrepreneurship across the India–Gulf corridor is historic. India’s Startup India initiative, launched in 2016, has recognised well over 150,000 startups through its national registry, according to the Department for Promotion of Industry and Internal Trade. Bahrain, Saudi Arabia, the UAE, Oman and Qatar have each embedded entrepreneurship in their national visions and built dedicated agencies, funds and labour programs to deliver it. The money and the mandate are there. What separates jurisdictions now is activation: whether the machinery converts intention into ventures that last.
Daniel Isenberg’s much-cited 2010 argument in Harvard Business Review still frames the problem well. Governments, he observed, tend to copy the visible artefacts of successful ecosystems — the incubator building, the venture fund, the university science park — and are then puzzled when the ecosystem does not follow. The artefacts are outputs of a working system, not its cause. The same mistake recurs at program level: the cohort, the demo day and the mentor list are visible; the selection quality, the training dosage and the follow-through are not, and they are what determine whether anything happens.
Four things a government is actually buying
Strip away the branding and every founder program is a bundle of four services. Naming them separately matters, because they have different costs, different evidence bases and different failure modes.
| Component | What it does | What the evidence says | Typical failure |
|---|---|---|---|
| Selection | Finds founders who are ready to use the program | Judges’ scores predict outcomes weakly; structured criteria and observed behaviour predict better | Choosing polished pitchers over capable operators |
| Capability transfer | Changes what founders know and do | Generic training has small effects; intensive, behavioural and practice-based training has large ones | Two-day workshops counted as “training” |
| Network access | Connects founders to capital, customers and talent | Effects depend on network quality; weak networks add little | A mentor list nobody activates |
| Signal | Certifies founders to investors and buyers | Real when the program is selective and known; otherwise absent | A certificate no investor recognises |
The most rigorous single study of a government accelerator remains the evaluation of Start-Up Chile by Juanita González-Uribe and Michael Leatherbee, published in the Review of Financial Studies in 2018. Their finding is uncomfortable for anyone who has ever funded a coworking space: the program’s basic bundle — equity-free cash and workspace — produced no measurable effect on venture performance. The component that did produce measurable gains in fundraising and survival was the entrepreneurship schooling: structured training and mentoring with accountability. The money got founders in the door; the method changed what happened to them afterwards.
A second strand of evidence explains the mechanism. Benjamin Hallen, Susan Cohen and Christopher Bingham’s 2020 study in Organization Science, asking bluntly whether accelerators work, found that the effective ones compress learning: ventures reach milestones faster because intensive, broad and structured consultation forces founders to confront hard questions early. Sandy Yu’s 2020 analysis in Management Science adds a finding that should reshape how ministries read their own dashboards: accelerated ventures were more likely to shut down early and raised less capital, which the author interprets as faster resolution of uncertainty. Founders learned sooner that an idea would not work, and stopped. For a program funder, early closures are therefore not automatically a failure statistic. They may be the program working.
The dosage problem
If capability transfer is the component that carries the evidence, then how much of it, and of what kind, becomes the central design question — and here the development-economics literature is unusually rich, because business training has been the subject of dozens of randomised trials.
David McKenzie and Christopher Woodruff’s review of that literature in the World Bank Research Observer reached a sobering conclusion: standard business training tends to change business practices modestly and profits barely at all, with effects often too small to detect in samples of the size most programs can afford. The GATE experiment in the United States, analysed by Robert Fairlie, Dean Karlan and Jonathan Zinman (NBER Working Paper 17804, later published in the American Economic Journal: Economic Policy), found that subsidised entrepreneurship training produced short-run effects on business ownership that faded within a few years. Generic content, delivered briefly, does not stick.
Against that backdrop, the Togo experiment reported by Francisco Campos and colleagues in Science in 2017 stands out. Comparing a traditional business-skills curriculum with a psychology-based “personal initiative” training — teaching proactive, self-starting, persistent behaviour — the researchers found the behavioural program raised firm profits by roughly 30 per cent, while the traditional curriculum’s effect (around 11 per cent) was not statistically distinguishable from zero. The lesson is not that accounting does not matter. It is that what founders do — how they search for customers, how they respond to setbacks, how they experiment — responds to training in a way that what they know does not, and that programs built around behaviour and practice outperform programs built around content.
For a commissioning agency, the design implications are concrete:
- Intensity beats coverage. A twelve-week program with weekly accountability for 100 founders will produce more measurable change than a one-day event for 5,000. The announcement economy prefers the second; the evidence prefers the first.
- Behaviour beats content. Curricula should be organised around actions — interviewing customers, shipping a prototype, running a pricing test — with content delivered in service of those actions, not the reverse.
- Accountability is a component, not a courtesy. Structured check-ins, milestone reviews and cohort peer pressure are the delivery mechanism through which training becomes practice.
- Founder psychology is a legitimate curriculum subject. Personal initiative, persistence and error-management training are evidence-backed and cheap relative to capital.
Money versus method: what the grant evidence says
Governments like grants because they are visible, countable and fast. The evidence on grants is more encouraging than the evidence on generic training — provided the grants are large enough to matter and the selection is honest about its limits.
The clearest case is Nigeria’s YouWiN! business-plan competition, evaluated by McKenzie in the American Economic Review in 2017. Winners received grants averaging around US$50,000 — large relative to the firms — and were followed for three years. Among new firms, winners were roughly 37 percentage points more likely to be operating a business three years later and roughly 23 percentage points more likely to employ ten or more people than comparable non-winners. Existing firms also grew. Because part of the winner pool was selected by lottery among semi-finalists, the study could estimate causal effects cleanly, and it could also test the judges: their scores were only weakly related to subsequent outcomes. Random selection among founders who had cleared a quality bar did about as well as expert ranking.
Two lessons follow. First, capital that is large relative to the venture’s needs, and unconditional on equity, can be transformative at the early stage — a finding consistent with Sabrina Howell’s work on R&D grants in the American Economic Review, which showed that small early grants roughly doubled the probability that a young firm subsequently raised venture capital. Second, selection is harder than it looks. Panels of experts scoring pitches a
