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There is a 34 page thesis deliberately answering the question "How to Copy YC" (making the conclusion that he makes in the article). There is a good lot of tha

by ErrantX 17y ago

There is a 34 page thesis deliberately answering the question "How to Copy YC" (making the conclusion that he makes in the article). There is a good lot of that in there. In the Spreadsheet linked from the article there is listings of lots of funds and their startups. It makes interesting reading; much of it subjective. For example YC has funded astronomically MORE startups than many other funds. On the other hand very few have exited or obtained more funding - and a large number are completely dead (compared to other funds). Techstars has a much much lower "dead" rate and a much higher follow on funding rate. Seedcamp have the "best" success rate (in terms of follow on funding) but fund one of the fewest number of startups. All of that data though is pretty useless for actually comparing them. For example the Seedcamp follow on funding might be as a result of their manouvering of VC's towards the startups and not much to do with the viability of the product. Or the startups coming through YC might well have a tendancy to fail regularly - but the community of startup operators it creates might be huge; and the connections they all make might ensure their second or third venture DOE succeed with a nice fat exit. What Im trying to say is comparing the "success" of an incubator is probably an unbelievably tough task.

jedc 17y ago
YC probably has a comparable success rate in terms of follow-on funding, but it's incredibly difficult to find the information for small angel rounds. (TechStars and Seedcamp helped me make sure my data was accurate, which helped their stats.) But thank you for the comments; putting some hard data and thinking behind this phenemenom was the whole point of my project! :)
philwelch 17y ago
Suppose each accelerator funds the top n startups, where n is the amount of slots they have open. In that case, comparing average results would be unfair. Compared to an accelerator that funds n startups, an accelerator that funds a smaller number n' of startups would fund the top n' startups rather than the median n' startups. If you take the top n' startups funded by YC, where n' is the number of startups funded by Techstars or Seedcamp, how do they compare then?
- jedc 17y ago
  The problem with this is that you don't know before you accept them what the top n startups will be. Thus, it's a significant decision when choosing how many startups to accept. More startups means a better chance at a big payoff, but with less time devoted to each. What's important from the point of view of a seed accelerator program founder (versus a startup founder), is what they will know before they accept companies into the program. The "top n" won't be immediately obvious.
  - philwelch 17y ago
    I'm somewhat trivializing the selection process, but it's probably more fair to compare the top n startups of YCombinator with the top n startups of TechStars rather than the total program aggregates. One of the things we're evaluating these funds on is their very ability to pick the top n--so a larger fund is at a disadvantage if you compare their median n against a competitor's top n.
andrewhyde 17y ago
I'm excited to hear the conversation around this. I would like to take a step back and point out that almost every major city in the states has a business incubator. We don't hear about them because not much is produced that we all use. Locally, they can produce some great projects. Just wanted to say this because the model of small investment, even if it is office space and time, is happening all around the world. YC just did it better than any of them (and deserves a ton of credit). :) I always go back to the first bubble and study the incubators. Such a sad ending to many of them (and why most 'accelerators' stay far away from the word 'incubator.' That would be a fascinating read. The take away from that (so I think) would be 'let's focus on building smart and sustainable accelerators' over 'which one is the best?' Loved reading your thesis, well done!
- jedc 17y ago
  Thanks. :) The only thing I found when I looked into incubators is that the business model and thus the incentives for both the startup and the incubator side appear to be much different than in a seed accelerator. That, and the word "incubator" means different things to different people. My worry is that in some cases incubators can start to become dependent on having companies in their space, and thus there's a lack of encouragement (or active dis-encouragement) to "graduate" from the incubator. That is a significantly different model than a seed accelerator where they are effectively kicked out at a certain date, so both sides have significant incentives to develop a product quickly. While I haven't studied incubators as in-depth as seed accelerators, the different incentive structure is what I would worry about. Accelerators seem to match incentives better between founders and the program. I agree that there is still a lot of scope for building more accelerators. They just need to be focused on the specific resources available to the program, and not another YC-clone general-web-application accelerator. Any new accelerator program should aim to be the absolute best in the niche they choose.

by ErrantX 17y ago

jedc 17y ago

YC probably has a comparable success rate in terms of follow-on funding, but it's incredibly difficult to find the information for small angel rounds. (TechStars and Seedcamp helped me make sure my data was accurate, which helped their stats.) But thank you for the comments; putting some hard data and thinking behind this phenemenom was the whole point of my project! :)

philwelch 17y ago

Suppose each accelerator funds the top n startups, where n is the amount of slots they have open. In that case, comparing average results would be unfair. Compared to an accelerator that funds n startups, an accelerator that funds a smaller number n' of startups would fund the top n' startups rather than the median n' startups. If you take the top n' startups funded by YC, where n' is the number of startups funded by Techstars or Seedcamp, how do they compare then?

jedc 17y ago
The problem with this is that you don't know before you accept them what the top n startups will be. Thus, it's a significant decision when choosing how many startups to accept. More startups means a better chance at a big payoff, but with less time devoted to each. What's important from the point of view of a seed accelerator program founder (versus a startup founder), is what they will know before they accept companies into the program. The "top n" won't be immediately obvious.
- philwelch 17y ago
  I'm somewhat trivializing the selection process, but it's probably more fair to compare the top n startups of YCombinator with the top n startups of TechStars rather than the total program aggregates. One of the things we're evaluating these funds on is their very ability to pick the top n--so a larger fund is at a disadvantage if you compare their median n against a competitor's top n.

andrewhyde 17y ago

I'm excited to hear the conversation around this. I would like to take a step back and point out that almost every major city in the states has a business incubator. We don't hear about them because not much is produced that we all use. Locally, they can produce some great projects. Just wanted to say this because the model of small investment, even if it is office space and time, is happening all around the world. YC just did it better than any of them (and deserves a ton of credit). :) I always go back to the first bubble and study the incubators. Such a sad ending to many of them (and why most 'accelerators' stay far away from the word 'incubator.' That would be a fascinating read. The take away from that (so I think) would be 'let's focus on building smart and sustainable accelerators' over 'which one is the best?' Loved reading your thesis, well done!

jedc 17y ago
Thanks. :) The only thing I found when I looked into incubators is that the business model and thus the incentives for both the startup and the incubator side appear to be much different than in a seed accelerator. That, and the word "incubator" means different things to different people. My worry is that in some cases incubators can start to become dependent on having companies in their space, and thus there's a lack of encouragement (or active dis-encouragement) to "graduate" from the incubator. That is a significantly different model than a seed accelerator where they are effectively kicked out at a certain date, so both sides have significant incentives to develop a product quickly. While I haven't studied incubators as in-depth as seed accelerators, the different incentive structure is what I would worry about. Accelerators seem to match incentives better between founders and the program. I agree that there is still a lot of scope for building more accelerators. They just need to be focused on the specific resources available to the program, and not another YC-clone general-web-application accelerator. Any new accelerator program should aim to be the absolute best in the niche they choose.