Seed Accelerator Rankings Project -SxSW
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SEED ACCELERATOR RANKINGS PROJECT
2013 Accelerator Rankings
Prof. Yael Hochberg
DIRECTORS
Emily Yee
RESEARCH ASSOCIATES
Dan Fehder
Prof. Susan Cohen
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#SEEDRANK
@yaelhochberg
@susleec
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“ THE GOAL OF THE SEED ACCELERATOR RANKINGS PROJECT IS TO
START A LARGER CONVERSATION ABOUT THE ACCELERATOR PHENOMENON,
ITS EFFECTS AND ITS PROSPECTS FOR THE FUTURE…”
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WHY RANKINGS?
Guidance for entrepreneurs considering the various programs
Encourage transparency
Learn about the relative success of programs and of accelerators as a
“startup jumpstart” overall
Which programs excel on various important dimensions?
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AFTER ALL… Accelerator participation
usually does not come cheap
Equity is the entrepreneur’s most valuable currency!
Average equity stake taken
6%
Average seed investment
$25k
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75 Startups Set to Strut at Y Combinator Demo Day 8/21/12
Inside the Startup-Generating Secrets of Y Combinator 9/11/12
Top Startup Incubators And Accelerators: Y Combinator Tops With $7.8 Billion In Value 4/30/2012
Investment Firm Y Combinator Goes on Offensive Against Hollywood 1/20/12
Got the Next Great Idea? 7/19/12
Coding Start-Ups Compete for Booming Market 1/24/12
Silicon Valley Guru Blasts Y Combinator Hype 9/13/12
Y Combinator Founder Issues New Warning to Start-ups 9/6/12
Y Combinator: New Start-ups Borrow Proven Business Models 8/21/12
10 Start-up Incubators to Watch Future TechStars, Step Forward 4/2/12
Accelerators Become Networks for Alumni 10/25/12
Alexandra Starr: Incubating Ideas in the U.S., Hatching Them Elsewhere 09/11/12
LOTS OF PRESS…
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…LITTLE RESEARCH LOTS OF PRESS…
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A fixed-term, cohort-based program, including mentorship and educational components, that culminates in a public pitch event or demo-day.
ac·cel·er·a·tor
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ac·cel·er·a·tor incubator =
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Many, though not all, provide a stipend or small seed investment, and receive an equity stake in the portfolio company
Most offer co-working space and other services in addition to mentorship, educational and networking opportunities
Some also offer a larger, guaranteed investment
A fixed-term, cohort-based program, including mentorship and educational components, that culminates in a public pitch event or demo-day. ac·cel·er·a·tor
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CRITERIA FOR INCLUSION IN THE RANKINGS IN 2013
Meet the definition of accelerator
Take an equity stake in the startup
Have graduated at least one cohort by 2013
Have at least 10 graduates
U.S.-based
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There is wide variation in the amount and detail of data collected by programs
Spot checked against public and proprietary data sources
For programs that did not provide data, data was web-scraped by CrunchBase and supplemented with additional data sources
DATA PROVIDED BY ACCELERATORS
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SUPPLEMENTED BY SURVEY ASSESSMENTS
INVESTORS STARTUPS
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LET’S GET STARTED!
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PAUL GRAHAM, YCOMBINATOR
"I think the way to measure ‘accelerators’ is by average VALUATION of the companies we fund. That's what we optimize for. That's the traditional measure of VC firms…, and though we disagree with VC firms about a lot of things, we agree about this."
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VALUATIONS
This, of course, treats companies that raised money through a convertible note, or companies that never raised, as if they have zero valuation… which is not necessarily true…
Of course, this does not fully reflect the valuation the average or median entrepreneur entering the program eventually achieves…
AVERAGE VALUATION Conditional on raising a priced round or exit
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2
3
4
5
…and s2ll doesn’t adjust for founding date differences.
AVERAGE VALUATION Across all por<olio companies
1
2
3
4
5
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This, again, treats companies that raised money through a convertible
note, or companies that never raised, as if they have zero valuation…
AVERAGE VALUATION Across all portfolio companies 1 year post-graduation
1
2
3
4
5
VALUATIONS
AVERAGE VALUATION Conditional on raising a priced round or exit
1 year post-graduation
1
2
3
4
5
And this again does not fully reflect the valuation the average or median entrepreneur entering
the program achieves.
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*for programs where valua2ons are available
AVERAGE VALUATION Across all portfolio companies 2 year post-graduation
1
2
3
4
5
VALUATIONS
AVERAGE VALUATION Conditional on raising a priced round or exit
2 year post-graduation
1
2
3
4
5
This, again, treats companies that raised money through a convertible
note, or companies that never raised, as if they have zero valuation…
And this again does not fully reflect the valuation the average or median entrepreneur entering
the program achieves.
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“We measure our success based on number of start-ups funded, revenue and earnings growth in our portfolio as well as EXITS and shareholder value.”
VIC GATTO, JUMPSTART FOUNDRY
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EVERYONE HAS THEIR EYES ON THE PRIZE…
BUT IS IT TOO SOON
TO TELL?
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Historically, average seed stage VC investment takes 7-9 years to achieve successful exit
Oldest accelerator program is YCombinator, founded 2005
Average program: – 3.1 years old – Graduated 6.6 cohorts
EXITS
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Across all the startups in our sample
ONLY 2.1% HAVE HAD A MEANINGFUL EXIT
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MEANINGFUL EXITS
% OF COMPANIES WITH MEANINGFUL EXIT ($5M+)
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2
3
4
5
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WHAT ARE COMPANIES WORTH
AT EXIT?
AVERAGE VALUATION across all exited companies
1
2
3
4
5
For top 5 programs
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WHAT ARE COMPANIES WORTH
AT EXIT?
AVERAGE VALUATION across all exited companies (top 5)
$21m
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“We measure our success based on number of START-UPS FUNDED, revenue and earnings growth in our portfolio as well as exits and shareholder value.”
VIC GATTO, JUMPSTART FOUNDRY
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NOT EVERY STARTUP NEEDS EXTERNAL INVESTORS…
BUT MOST OF THE ONES THAT GO THROUGH AN
ACCELERATOR DO.
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Across all the startups in our sample
59.3% HAVE RAISED SIGNIFICANT $$
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Raised significant financing (>200K)
Doesn’t include guaranteed funding from accelerator or affiliated fund
FUNDRAISING
% THAT RAISED $$ 1 year after program
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3
4
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% THAT RAISED $$ to date
1
2
3
4
5
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FUNDRAISING
AVERAGE $$ RAISED 1 year after program
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2
3
4
5
MEDIAN $$ RAISED 1 year after program
1
2
3
4
5
Condi2onal on having raised outside capital…
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FUNDRAISING
AVERAGE $$ RAISED 1 year after program (unconditional)
AVERAGE $$ RAISED 1 year after program (conditional)
Of course, this is conditional on having raised outside capital…
$1m $1.7m
Across the entire portfolio, with zeros for startups that did not raise.
For top 5 programs
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FUNDRAISING
AVERAGE $$ RAISED to date (unconditional)
1
2
3
4
5
AVERAGE $$ RAISED to date (conditional)
1
2
3
4
5
Of course, this is conditional on having raised outside capital…
Across the entire portfolio, with zeros for startups that did not raise.
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FUNDRAISING
AVERAGE $$ RAISED to date (unconditional)
AVERAGE $$ RAISED to date (conditional)
$1.8m $2.8m
Of course, this is conditional on having raised outside capital…
Across the entire portfolio, with zeros for startups that did not raise.
For top 5 programs
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“….things like jobs created, BUSINESSES STILL IN OPERATION, talent retained in the region and new non-Brandery affiliated startups in town all belong on our scoreboard.”
MIKE BOTT, THE BRANDERY
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But if you are going to fail, maybe it is better to fail fast… …and an accelerator may help you identify failure faster.
SURVIVAL
% STILL OPERATING (or ACQ) 1 year after program
1 100%
4 97%
5 96%
% STILL OPERATING (or ACQ)2 year after program
1 100%
3 95%
4 93%
5 88%
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SURVIVAL
Incubators
time
startup trajectory
Accelerators
accelerate to escape velocity…. or fail/pivot fast
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“long term…. we help startup communities
mature by organizing existing generations of
entrepreneurial leaders in those communities
to nurture the generation that follow. We are
building a MASSIVE INTERCONNECTED SELF-SUSTAINING NETWORK that is
changing the very nature of how startups are
built and supported in the future.”
DAVID COHEN, TECHSTARS
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Network Size (# of graduates)
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WHOM YOU KNOW MATTERS…
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WHAT DO INVESTORS THINK?
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Best Programs
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INVESTOR OPINIONS
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“It is also important to understand the
SATISFACTION AND EXPERIENCE OF THE COMPANIES that went through an
accelerator so that entrepreneurs
considering accelerators really understand
the best fit for them.”
JIM JEN, ALPHALAB
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WHAT DO THE ENTREPRENEURS THINK?
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11
Response rates were phenomenal.
PROGRAMS COVERED IN THIS STUDY AGREED TO PUSH OUR SURVEY OUT TO THEIR ENTREPRENEURS
of the 44
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Mentorship
Management + Financial Issues Industry Specific Knowledge General
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2
3
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5
THE ENTREPRENEURS SAY…
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SO IS IT WORTH IT? Let’s see what the entrepreneurs have to say.
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90% SAY THAT THEY WOULD REPEAT THE EXPERIENCE
95% SAY IT WAS
WORTH THE EQUITY THEY GAVE UP
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WOULD YOU REPEAT?
1 100%
2 96%
3 95%
4 93%
5 92%
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WAS IT WORTH THE EQUITY?
1 100%
2 91%
3 88%
4 80%
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WOULD YOU RECOMMEND TO OTHERS?
Net Promoter Score = %Promoters - %Detractors
How likely is it you would recommend the program to a friend/another entrepreneur?
10 9 8 7 6 5 4 3 2 1 0
Promoters Passives Detractors
* not all programs pushed the survey to their grads
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WOULD YOU RECOMMEND TO OTHERS?
1 93%
2 91%
3 88%
4 80%
5 77%
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OF COURSE, THERE ARE MANY THINGS WE CAN’T EASILY MEASURE…
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“We also strive to help build the capabilities
of the entrepreneurs who go through the
program to help them as they build not
only their current companies but also their
next ones…one of our goals is to help grow
the startup community.”
JIM JEN, ALPHALAB
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11
12
15
AND THE WINNERS ARE….
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2
3
4
5
6
7
9
10
GOLD SILVER
BRONZE
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SOME PARTING THOUGHTS
Program evaluation is a non-trivial task
Data, data, and even more data, is the only way we will be able to determine the contribution of accelerators
Programs should track a wider set of outcome variables
There is not one single ultimate way to measure success
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“…an accelerator should be judged on how well it delivers on its promises to founders.
PATRICK RILEY, GAN
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“If an accelerator says it is going to be good at mentoring, then excel at mentoring. If it says it is going to be good at bring investment dollars to companies, then excel at finding investors. Accelerators need to be upfront with founders about what they can and will deliver and be judged on those promises.”
PATRICK RILEY, GAN
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CONTACT
Yael Hochberg [email protected]
Slides from today can be found at http://yael-hochberg.com/rankings.htm
Susan Cohen [email protected]
#seedrank
SXSW.COM/RATE