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Does TechStars Really Have a 90% Success Rate?
I like TechStars, but are their published statistics accurate? Please help me figure it out.
I looked at stats available on: techstars.com/companies/stats/ and saw they have a success rate (Active + Acquired companies) of over 90%, but I only see 75%. Here's why.
The first thing I did is calculate without their last 10 cohorts. The reason is these cohorts graduated less than 1 year ago and haven't had time to succeed or fail yet. Without the last 10 cohorts (111 of their 291 startups) the success rate falls to 85% when they are removed. (Or down to 80% is you are more realistic and remove any startups younger than 2 years, but I went conservative.) I'm not changing their definition of success as being survival rate, rather than some other metric.
The second thing I did was look at all startups marked Active. WIthout a way to judge if they are Active other than what I see online, as a proxy I looked at whether they had posted to a blog, Twitter, or Facebook anytime in the last year. In some cases there was news of them going into the deadpool or a domain for sale, but for the most part they look like Zombies, not officially dead.
It's not a perfect way to judge so please let me know if any of these startups that look inactive are really alive:
J-Squared Media, Application Experts, UsingMiles, HaveMyShift, InvitedHome, ScriptPad, Marginize (the team formed a different company but I'm counting this one as failed), Highlighter, RewardsForce, Wantworthy, Creative Brain Studios, Strohl Medical Technologies, Veri, CloudSnap, Emergent One, Rewind Me, ReplySend, RollSale.
To measure accelerator programs against this 90% standard, I'd want it to be accurate. Again, I like TechStars and I'm posting this to learn. If we measure all accelerators the same way, I'm sure a lot of obscure programs have high success rates as well.
Thanks.
- paulorlando 13y agoRevising the above since I was told that Highlighter and UsingMiles were acquired and that App-X is alive and InvitedHome changed its name to Invited. The success rate is now at 77%.
- argonaut 13y ago> they have a success rate (Active + Acquired companies) of over 90% Firstly, nowhere on that page does TechStars claim a 90% success rate. The interpretation of Active + Acquired = Success, is actually wrong. It is actually trivially easy for a startup that, for all intents and purposes, is dead, to keep limping along for years, or to otherwise maintain a skeleton presence. You could consider using the acquisition % as a metric for success, but even acquisition/exit % is not a good metric for success because the best companies go years and years before IPO/exit (see: YC's biggest winners like Dropbox and Airbnb, which have not exited yet but are widely considered mega-unicorn successes), and because acquihires are actually failures, just dressed up as soft exits. The closest metrics to success for measuring an accelerator's performance that I can think of are % of graduate companies that raise money, average seed valuation of companies after graduation, and/or average valuation of graduate companies in the entire portfolio. Even those metrics are flawed.
- paulorlando 13y agoAgreed that Active does not equal succeeded, I was just seeing that in the list, there are companies that have already failed/closed without being listed and should not be counted at all. While the success = 90% rate isn't on that page, they've said it in presentations and it has certainly been reported / misreported in the press.