
Techstars Graduates’ Survival Rates: What the Numbers Show - markmassie
http://blogs.wsj.com/venturecapital/2014/11/20/techstars-graduates-success-rates-what-the-numbers-show/
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tonydiv
I know a lot of zombie startups that make little to no money, yet they raised
seed rounds that will last them 2 years.

I know a handful of other startups that were "acqui-hired" but the founders
did not see any returns (and the VCs didn't even get their initial investment
back). Even in the case that the returns were 1.2x the initial investment,
these are not the winners that investors are looking for.

I would love to see a more in-depth analysis of these situations, but
unfortunately, many of them are not publicized.

~~~
balls187
> I know a lot of zombie startups that make little to no money, yet they
> raised seed rounds that will last them 2 years.

Were these zombie startups in YC or Techstars?

~~~
ed
You see this in the startup world in general. Worth noting there's often a lot
going on behind the scenes at zombie startups – off-label experiments, etc.,
so they can be less dead than they appear.

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Balgair
Well, on a long enough time span, all companies die. Picking the number of
years afterward to measure by is tough and may not be the best way to do so.
Perhaps measuring the success by a more personal and human method describes
the elephant better: Deferred income. Take an average (yes, also fraught with
trouble) of yearly income for people of that skill set (entrepuners, coders,
widget makers, inventors, etc ) and then see if the founders and employees
made less, within a standard deviation, or far above that average, on a year
to year basis. This is really troublesome to get the data at all, as it is
very personal and emotional to a lot of folk. Also, the average is pretty
wonky here as well. However, it should be a starting point to see how
companies are doing a little bit better than a plain up/down number.

~~~
paulhauggis
the problem is that those companies took investor money and the purpose of
them is to in the very mininum, turn a profit. Most startups don't focus
enough on making money from the start and go out of business.

Looking at most of the startups in my local area, I can almost immediately
tell which ones will be out of business.

hoping for a buyout isn't a business model.

~~~
Balgair
I sincerely hope you are going into the VC game then! Skills like that are
very hard to come by and worth a lot.

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cpncrunch
If you have a look at the Y Combinator startups (at
[http://yclist.com](http://yclist.com)), quite a large proportion of the 2008
and earlier startups appear to be dead. Although it only lists "Dead" for a
some of them, if you click on the links for the other sites (apart from the
ones that say "Exited") you'll see a lot of their websites don't exist any
more. It looks like about 80-90% are dead.

~~~
robryan
It would be an interesting exercise for someone to go down the list and try
and contact each of the seemly dead companies to confirm.

Not sure if there is a way for people to contribute updates to yclist? For
example just clicking through from the oldest first I see that the company
snipshot was acquired at some point but can't see any tech coverage on it
apart from a page on the acquirers website.

~~~
jdawg77
I'd be happy to contact and otherwise help out updating that Yclist; hadn't
seen it before but there are a _lot_ of older URLs that aren't working. With
the corp name (if it's possible to find) for say, California, you can look up
the organization and see if it's still active, etc.

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Animats
That's about normal for VC-funded firms. About 10% are big winners, about 10%
go bust, and the rest become "zombies", able to meet their operating expenses
but not return their investment. Zombies are a headache for VCs; they require
attention but generate no revenue.

YCombinator has been reducing the amount of startup capital each startup gets,
so that the zombies die faster.

[http://www.quora.com/Whats-the-real-reason-for-the-drop-
in-c...](http://www.quora.com/Whats-the-real-reason-for-the-drop-in-cash-that-
Y-Combinator-gives-companies)

~~~
richardbrevig
As of April they now give a flat $120,000 for 7%:

[http://blog.ycombinator.com/the-new-deal](http://blog.ycombinator.com/the-
new-deal)

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api
I'd like to see data on "no accelerator". This of course would be tougher to
put together, since by definition there exists no coherent list of such
companies in one place.

Other related data breakdowns I'd love to see:

\- Number of founders

\- Amount of seed capital taken

\- Type of funding vehicle (equity, convertible note, SAFE or similar)

\- Location

~~~
jedc
I've read one draft paper that does exactly that... Try to compare companies
that have gone through accelerators to counterparts that haven't. I would hope
it gets published sometime next year. I can't share the content (I agreed to
keep it confidential), but I found it intriguing. (I'm the founder of
[http://www.Seed-DB.com](http://www.Seed-DB.com) so that's how I'm in touch
with some researchers in the area)

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jkaljundi
@sama said: "there are now 27 YC companies worth $100 million or more!" \- I
wonder how many there are for TS?

@Grabcad was sold for ~100m, I wonder what the other major successes have
been?

~~~
jedc
They haven't exited, but prominent companies are: DigitalOcean, SendGrid,
Orbotix/Sphero, DataRobot. (They've ask raised pretty significant rounds)

~~~
champion
I'd put Localytics on that list as well.

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Gatsky
These charts aren't great. A single survival curve could display all of that
data, and account for the different starting times of the startups[1]. But it
looks like Datawrapper can't do survival curves. Also, a 3 section pie chart
is a waste of space.

[1]
[http://en.wikipedia.org/wiki/Kaplan%E2%80%93Meier_estimator](http://en.wikipedia.org/wiki/Kaplan%E2%80%93Meier_estimator)

~~~
seccess
My PhD adviser's rule of thumb with pie charts: don't use pie charts.

~~~
taylorbuley
Florence Nightingale invented the pie chart to be able to convey medical data
visually in a time before other visual devices were invented. They still serve
a role, but an argument against them today is that representing two
dimensional data in three dimensions can be misleading (such as w/surface
area).

~~~
andrioni
Sorry, but did you mean one-dimensional data represented in two dimensions, as
in scalars represented through areas?

~~~
taylorbuley
Pie charts can be three-dimensional, but thanks for clearing up what I
muddied.

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tomkin
I wonder if most of the people behind these startups are still working under
the "work hard, huge payout" mantra, given the evidence against that highly
unlikely outcome.

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joelrunyon
Does this include startups that were incubated by another accelerator which
was bought by TechStars?

Excellerate Labs in Chicago comes to mind..

~~~
Brushfire
What makes you think Excelerate was 'bought'?

~~~
joelrunyon
Was always my assumption that's what "join forces" meant:

1) [http://www.techstars.com/announcing-techstars-in-
chicago/](http://www.techstars.com/announcing-techstars-in-chicago/)

2) [http://technori.com/2013/02/3147-excelerate-labs-to-
become-t...](http://technori.com/2013/02/3147-excelerate-labs-to-become-
techstars-chicago/)

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gkop
So 0 IPOs so far?

~~~
champion
Can't tell if this is a joke. Typical time to IPO is like 8+ years aka longer
than TechStars has been around.

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ommunist
What is always deceiving in statistics like that? Authors rarely realise the
fact that even if just a single startup survives with a good product, it is
much better for humanity than survival of a single journalist or statistician
(except R programmers, those are precious).

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samirmenon
"We also think these breakouts aren’t necessarily a good way to judge
accelerators."

Is Y Combinator a bit arrogant to say that the success of its startups is a
bad a metric for evaluating their success? If it is a bad metric, what's a
good metric?

~~~
bagels
Profits? The distribution of returns on investments is not flat.

