

Y Combinator vs TechStars: Whose Companies Are Bringing In More Funding? - tilt
http://techcrunch.com/2011/12/11/ycombinatortechstars/

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pg
"Another metric would be valuations — are companies becoming more valuable
over time? — but we also don’t have good access to that."

That is the real test, and we've published those numbers:

<http://ycombinator.com/nums.html>

(The number I quoted in June is now out of date. The combined value of the top
21 companies we've funded is now slightly over $7 billion, and the average
value of all the companies we funded up to summer 2010 is thus about $33
million.)

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whenisayUH
PG - What is the median valuation of those fundraising rounds? Averages are
not a great metric because the few big valuation winners (Dropbox, Airbnb)
skew the average big time and bring up the "normals" a ton.

If Airbnb is valued at $1B and if there are 200 YC alums who've raised, that
adds $5M to the "average valuation" of each YC startup. (I know those #s are
not right but just for purposes of the example).

Those median valuation figures available?

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byrneseyeview
For funding, the median is less useful. I wouldn't be surprised if the median
series A returned a loss.

If optimizing for the median outcome is your goal, VC funding is probably not
a good plan.

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whenisayUH
Not sure I understand your point. I'm asking for median valuations as averages
often distort reality.

Plus, "median series A returned a loss" - huh? Can you clarify?

If 5 companies have valuations of $5, $10, $15, 20, $1000, the avg is $210
million. The median is $15 million. I'd argue the median is more
representative of valuations received than averages. And if you're a startup
founder, the median is more useful to gauge the program as that is more likely
what your valuation will be near than the average.

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ericd
Average is the important metric in startup investing, because the distribution
of outcomes is _extremely_ skewed, and the median is likely a net negative
outcome at re series A stage. It's those few blockbuster hits that make VC
investing work.

New founders might care more about the median, but big investors, not so much.

~~~
whenisayUH
Absolutely. But it seemed the original TC article was trying to suggest which
program was best for startups. So if trying to figure out which program is
better for general partners/limited partners, I agree average makes sense. For
startup founders, median is what matters.

~~~
ericd
Fair. That also depends on whether you're the type of person who wants to make
something hugely impactful. If you are, average might still be better.

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whenisayUH
While I appreciate the attempt, this was pretty shoddy data analysis. First,
Crunchbase's data is pretty bad. I saw a spreadsheet floated around some time
ago that had a lot more YC companies listed on it (~200) so this is def not
comprehensive. I'd imagine their TechStars data is even less complete given
they tend to cover TS less than YC.

In terms of the analysis, some attempt to normalize the data would have been
good.

Also, time-series figures would be more interesting as it would help show
which program might be gaining or losing momentum.

In general, the idea of total funding being the best metric is laughable given
how a few outliers skew the data.

It would have been interesting to see how quickly companies raise after the
programs conclude. In a sense, analyzing by vintage/class would be more
useful.

And then to conclude with the following "Y Combinator beat TechStars in many
of these metrics, but none of these numbers translate to which (if either) is
the best fit for your startup. That’s for you and them to figure out."

If your going to do some data analysis, try to make it actionable/useful and
stand by it or take an opinion vs just a shallow attempt at data analysis
which you neuter with caveats.

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swombat
_It would have been interesting to see how quickly companies raise after the
programs conclude._

A bit harsh on TS, considering every YC startup automatically raises an extra
$150k right away...

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whenisayUH
TS also something similar. All TechStars companies can get $100k.

[http://www.businessweek.com/smallbiz/running_small_business/...](http://www.businessweek.com/smallbiz/running_small_business/archives/2011/09/techstars_raises_24m_to_offer_every_startup_100000.html)

~~~
snprbob86
At least in Seattle, no such offer is available until next year's TS class.

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te_chris
More funding? Who cares, how about whose companies are making more revenue and
holding onto more of their equity?

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TamDenholm
I think the better question would be, whose companies are making more money,
rather than raising it to spend.

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tlb
That is the better question. Unfortunately the revenues of startups are
usually trade secrets. Funding events are based on investors looking at
revenues, so they're the best indication available.

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davidedicillo
I wish they were also showing the amount of profits generated by the startups.
The amount of founding doesn't translate directly in success...

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leelin
Wait, Bill Clerico from WePay was on Millionaire Matchmaker... that's gotta
count!

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swanson
Can a reality show - that several of the founders involved with have spoken
negatively of - really be an advantage for TechStars?

Also, why do the plot areas go above the maximum axis labels?

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mjbellantoni
This analysis would be more interesting if it were more sophisticated. At the
very least, the metrics could be normalized by the number of companies.

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garry
Notably, median money raised after seed funding is normalized, as it is not
scaled by the number of companies.

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goodweeds
How about an analysis as to which companies have created more jobs or
generating more revenue?

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binarysolo
Neat little comparison and nice tidbit of info derived.

But as a fellow data scientist, the choice of bar graphs to represent this
compact bit of info really just feels like padding to the article which could
really use a bit more analysis.

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munaf
Obviously measuring success by capital raised is silly. Is there a better
alternative? Some function of pageviews (for more 'social' companies) vs.
money raised? Tough to say.

In any case, I wouldn't read much into the OP.

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stretchwithme
how about profits earned?

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munaf
I meant in lieu of having full access to their books.

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jamgraham
shouldn't the focus be on profitability rather than funding.

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jot
I'm thinking the first version of Justin.tv makes YC and TechStars even on the
reality TV show front. Have a feeling it turned out better too.

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dudurocha
Maybe they could use revenue as a metric. but I thinks its not very important
regarding startups...

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lambtron
techcrunch analysis should standardize their metrics with dividing by total
number of startups funded. in addition to including revenues/profits, etc.

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B0Z
HN is more populated in recent weeks with TC titles which would make it less
read by some. Maybe the name should change from Hacker News to Crunch News or
Hacker Crunch. :: eyeroll ::

