Start-up accelerators have become a prominent feature of the entrepreneurship landscape in recent years. New programs appear nearly every month, and in many ways, accelerator participation has become a rite of passage for budding entrepreneurs. Yet, with the proliferation of programs, the newness of the phenomena, and little to no publicly available data on outcomes for the programs and affiliated start-ups, it is hard for entrepreneurs to determine which programs are most effective and, more importantly, which specific program would be the best fit for their particular start-up’s goals. With this challenge in mind, we set out over the last few years to both foster conversation about the accelerator model, and help entrepreneurs gain visibility into the strengths of individual programs.
To begin, our research enterprise the Seed Accelerator Rankings Project releases an annual ranking of accelerator programs. To construct these rankings, we collect detailed, confidential data directly from accelerator programs. We then calculate quantitative measures to better understand how programs stack up on several important outcomes, and supplement those measures with a broad survey of each accelerator’s graduates. As a non-commercial, academic-based enterprise, we provide a neutral ground for accelerators to share confidential data, which allows us in return to provide the community with rank-based benchmarking and aggregate statistics without revealing confidential information about individual start-ups.
Running the rankings also provides us insight into the accelerator industry at large. Heading into 2015, a number of trends are apparent in the accelerator space. First and foremost is the emergence of many new programs. A large proportion of new programs focus on a specific industry – for example, healthcare or energy. Additionally, a good number of new programs are associated with local governments or state initiatives. We continue to see consolidation in the space, with the merger of several programs into the TechStars network, and the expansion of networks of co-branded programs more generally. A new trend is established programs pivoting away from the accelerator model and label. For example, notably absent in this year’s list are Y Combinator and RockHealth – both organizations now classify themselves and operate
seed funds rather than accelerators, shifts we confirmed by speaking with entrepreneurs currently in their portfolios. Instead of fully pivoting, other programs are adding ancillary seed or later-stage funds, or other complementary offerings such as code academies alongside their portfolio companies. Finally, besides the emergence of many new programs, 2014 also saw the demise of many existing programs, some top-rated in the past.
In determining who qualified for the rankings, we considered all programs that met the formal definition of an accelerator program: fixed-term, cohort-based, with educational and mentorship components, culminating in a public pitch or demo day. Additionally, programs had to have graduated at least one cohort, have at least 10 graduates, be primarily located in the U.S., and be willing to provide full transparency to our team. Certainly, there are some programs out there that call themselves accelerators who do not meet these criteria, and therefore did not qualify for this rankings project. Ultimately, we verified and invited over 150 programs to participate in the rankings process.
The metrics contributing to the rankings are broad, and include: the average valuations of the portfolio companies; the percentage of graduates that raise significant venture or angel funding; the average amount of dollars raised by the companies; the percentage of portfolio companies that have had a significant exit event; the average valuation of the companies at exit; the percentage of companies still operating. To make sure we are comparing apples to apples, we measure outcomes one, two, and three years after graduation, and we adjust for differences in the stage start-ups are at when they enter the accelerator — for example, whether they had already raised a round or two of financing or had revenue, versus entering as a brand new company. We also calculate and include each program’s Net Promoter Score, based on alumni’s survey responses to the question of whether they would recommend the program to a fellow entrepreneur. Nearly 1000 alumni of accelerator programs participated in our survey.
Some overall statistics shed light onto the progress of the accelerator form. Overall, the start-ups that have graduated from the accelerators in our top 10 have a current total valuation slightly under $4.4 billion, though only 3.5% have exited successfully, a number that is low, but not necessarily surprising given how new the phenomenon is relative to the typical number of years it takes for a seed stage startup to reach a successful exit. 35.6% of the companies raised a significant round of financing within a year of graduating from a program, with an average raise of $1.5 million. Also, it is remarkably clear that for the top programs, there is near-universal satisfaction from the start-ups’ perspectives. 96% of startups graduating from the top 10 programs said that, knowing what they know now, they would repeat the experience.
For each accelerator, we compute means and medians within each category of measure, and then weight each category to produce a composite score. Within the top 20 programs this year, there are a number of close groupings and an outright tie. The top 10 programs are relatively close in composite score; two programs tie for 12th place, and the programs in slots 16 to 20 are also relatively close in score. While we have numbered programs by their relative composite score, a more accurate way to view our results may be in groupings of “gold,” “silver,” and “bronze” medal winners. Regardless, all of the top 20 programs have distinguished themselves as providing a top-notch experience for their start-ups.