What is the incentive for federations to accept start ups?

One of the main criticisms of systems such as self-managed careers licenses is the incentive for existing members to increase barriers to entry for new entrants, reducing competition. The participatory economy model still has an element of competition in the annual planning stage, and since start-ups need to apply to the federation for capital, would this federation not prefer to accept fewer applications to reduce the pool of options in the planning stage and increase their own chances for success/total income awarded? Would a better solution not be to have all start ups proposed in the planning stage alongside incumbent firms and if they are successful they receive the allocated capital and join the federation automatically?

There is also a related question of a hostile environment within federations towards newer, more efficient firms which may have pushed out older firms - when the federations vote on compensations, would personal feelings not warp accurate reflections of effort? (assuming that there is a direct vote on effort, but this would apply also to the vote on the system of compensation, the result of which would favour existing firms)

You raise a very good point. I respond to this problem briefly in chapter 6 of Democratic Economic Planning, on pages 121 - 122. Here are some of the ideas I floated there:

“In many ways it is easier for a new, innovative group to put their idea into motion than in capitalism, where they would either have to save up enough themselves or convince a lender to finance their operation… But what if industry federations are too conservative in these judgements [making sure a group is serious and credible], and act like old fuddy-duddies who stifle new ideas and innovation?.. Finally, there is no reason a review board separate from all the industry federations cannot be created where groups who were turned down for accreditation by their industry federation can appeal for approval. This board could even be ordered to overturn rulings from the industry federation until the number of new firms they approve who turn out to be crackpots reaches some specified percentage – demonstrating that the review board was no longer being too conservative in accrediting startups.”