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SEED ACCELERATOR

RANKINGS PROJECT
2013 Accelerator Rankings
Prof. Yael Hochberg
DI RECTORS
Emily Yee
RESEARCH ASSOCI ATES
Dan Fehder
Prof. Susan Cohen
#SEEDRANK
"#$%&'()'*%+,
"-.-&%%)
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
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?
AFTER ALL
Accelerator participation
usually does not come cheap
Equity is the entrepreneurs most valuable currency!
Average equity stake taken
6%
Average seed investment
$25k
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 Ofensive 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
LITTLE RESEARCH
LOTS OF PRESS
A xed-term, cohort-based
program, including mentorship
and educational components,
that culminates in a public pitch
event or demo-day.
accelerator
accelerator
incubator
=
Many, though not all, provide a stipend or small
seed investment, and receive an equity stake in the
portfolio company
Most ofer co-working space and other services in
addition to mentorship, educational and
networking opportunities
Some also ofer a larger, guaranteed investment
A xed-term, cohort-based
program, including mentorship
and educational components,
that culminates in a public pitch
event or demo-day.
accelerator
CRITERIA FOR INCLUSION
IN THE RANKINGS IN 2013
Meet the denition 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
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
SUPPLEMENTED BY SURVEY
ASSESSMENTS
INVESTORS STARTUPS
LETS GET STARTED!
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
rms, and though we disagree with
VC rms about a lot of things, we
agree about this."
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 reect
the valuation the average or median
entrepreneur entering the program
eventually achieves
AVERAGE VALUATION
Conditional on raising a priced round or exit
1
2
3
4
5
/$01 -2&& 1(%-034 $15.-4 6(+ 6(.0170, 1$4% 178%+%0)%-9
AVERAGE VALUATION
:)+(-- $&& ;(+<(&7( )(=;$07%-
1
2
3
4
5
This, again, treats companies that
raised money through a convertible
note, or companies that never raised,
as if they have zero valuation
AVERAGE VALUATION
Across all portfolio companies
1 year post-graduation
1
2
3
4
5
VALUATIONS
AVERAGE VALUATION
Conditional on raising a priced round or exit
1 year post-graduation
1
2
3
4
5
And this again does not fully
reect the valuation the average
or median entrepreneur entering
the program achieves.
>6(+ ;+(,+$=- ?'%+% @$&.$2(0- $+% $@$7&$*&%
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
reect the valuation the average
or median entrepreneur entering
the program achieves.
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
EVERYONE HAS
THEIR EYES
ON THE PRIZE
BUT IS IT
TOO SOON
TO TELL?
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
Across all the startups
in our sample
ONLY 2.1% HAVE
HAD A MEANINGFUL EXIT
MEANINGFUL EXITS
% OF COMPANIES
WITH MEANINGFUL
EXIT ($5M+)
1
2
3
4
5
WHAT ARE COMPANIES WORTH
AT EXIT?
AVERAGE VALUATION
across all exited companies
1
2
3
4
5
A(+ 4(; B ;+(,+$=-
WHAT ARE COMPANIES WORTH
AT EXIT?
AVERAGE VALUATION
across all exited companies (top 5)
!"#$
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
NOT EVERY STARTUP
NEEDS EXTERNAL
INVESTORS
BUT MOST OF THE ONES
THAT GO THROUGH AN
ACCELERATOR DO.
Across all the startups
in our sample
59.3% HAVE
RAISED SIGNIFICANT $$
Raised signicant nancing (>200K)
Doesnt include guaranteed funding from accelerator
or afliated fund
FUNDRAISING
% THAT RAISED $$
1 year after program
1
3
4
5
% THAT RAISED $$
to date
1
2
3
4
5
FUNDRAISING
AVERAGE $$ RAISED
1 year after program
1
2
3
4
5
MEDIAN $$ RAISED
1 year after program
1
2
3
4
5
C(0172(0$& (0 '$@70, +$7-%1 (.4-71% )$;74$&/
FUNDRAISING
AVERAGE $$ RAISED
1 year after program
(unconditional)
AVERAGE $$ RAISED
1 year after program (conditional)
Of course, this is
conditional on having
raised outside capital
$1m $1.7m
Across the entire portfolio,
with zeros for startups that
did not raise.
A(+ 4(; B ;+(,+$=-
FUNDRAISING
AVERAGE $$ RAISED
to date (unconditional)
1
2
3
4
5
AVERAGE $$ RAISED
to date (conditional)
1
2
3
4
5
Of course, this is
conditional on having
raised outside capital
Across the entire portfolio,
with zeros for startups that
did not raise.
FUNDRAISING
AVERAGE $$ RAISED
to date (unconditional)
AVERAGE $$ RAISED
to date (conditional)
$1.8m $2.8m
Of course, this is
conditional on having
raised outside capital
Across the entire portfolio,
with zeros for startups that
did not raise.
A(+ 4(; B ;+(,+$=-
.things like jobs created, BUSINESSES
STILL IN OPERATION, talent retained in
the region and new non-Brandery
afliated startups in town all belong on
our scoreboard.
MIKE BOTT, THE BRANDERY
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
D(+ :CEF 1 year after program
1 100%
4 97%
5 96%
% STILL OPERATING
D(+ :CEF2 year after program
1 100%
3 95%
4 93%
5 88%
SURVIVAL
Incubators
time
startup
trajectory
Accelerators
accelerate to escape velocity. or fail/pivot fast
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
Network Size (# of graduates)
1
2
3
4
5
WHOM YOU KNOW MATTERS
WHAT DO INVESTORS THINK?
Best Programs
1
2
3
4
5
INVESTOR OPINIONS
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 t for them.
JIM JEN, ALPHALAB
WHAT DO THE
ENTREPRENEURS THINK?
11
Response rates were phenomenal.
PROGRAMS COVERED IN THIS
STUDY AGREED TO PUSH OUR
SURVEY OUT TO THEIR
ENTREPRENEURS
of the
44
Mentorship
Management + Financial Issues Industry Specic Knowledge General
1
2
3
4
5
THE ENTREPRENEURS SAY
SO IS IT WORTH IT?
Lets see what the entrepreneurs have to say.
90%
SAY THAT THEY WOULD
REPEAT THE
EXPERIENCE
95%
SAY IT WAS
WORTH THE EQUITY
THEY GAVE UP
WOULD YOU REPEAT?
1
100%
2
96%
3
95%
4
93%
5
92%
WAS IT WORTH THE EQUITY?
1
100%
2
91%
3
88%
4
80%
WOULD YOU RECOMMEND
TO OTHERS?
Net Promoter Score =
%Promoters - %Detractors
How likely is it you would recommend the program
to a friend/another entrepreneur?
#& ' ( ) * + , - " # &
G+(=(4%+-
G$--7@%-
H%4+$)4(+-
* not all programs pushed the survey to their grads
WOULD YOU RECOMMEND TO OTHERS?
1
93%
2
91%
3
88%
4
80%
5
77%
OF COURSE,
THERE ARE MANY
THINGS WE CANT
EASILY MEASURE
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 onesone of our goals is to help grow
the startup community.
JIM JEN, ALPHALAB
11
12
15
AND THE WINNERS ARE.
1
2
3
4
5
6
7
9
10
./01
230456
76/895
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
an accelerator should be judged on how
well it delivers on its promises to founders.
PATRICK RILEY, GAN
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 nding investors.
Accelerators need to be upfront with
founders about what they can and will
deliver and be judged on those promises.
PATRICK RILEY, GAN
CONTACT
Yael Hochberg
hochberg@mit.edu
Slides from today can be found at
http://yael-hochberg.com/rankings.htm
Susan Cohen
scohen2@richmond.edu
#seedrank
SXSW.COM/RATE

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