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Universal Journal of Industrial and Business Management 3(2): 54-57, 2015 http://www.hrpub.org
DOI: 10.13189/ujibm.2015.030203
Data Driven Analysis of Startup Accelerators
Krishna Regmi1,* , Syed Adeel Ahmed2 , Mark Quinn3
College of Engineering, University of New Orleans, United States
Copyright © 2015 The University of New Orleans, All rights reserved.
Abstract The startup accelerators help nascent startups
grow by providing funding and resources. This paper
summarizes a data driven analysis of startup accelerators
success and presents their growth trends. The goal of this
paper was to assess the effectiveness of accelerators. The
methodology was to use data to compare US startups that
went through the accelerator program with the startups many
of which according to Kauffman Foundation failed within
5-6 years, and the businesses that went through accelerator
program outside of the US. Data for accelerators was
collected from seed-db.com and was filtered for those that
were established from 2005-2014. The data shows that the
number of accelerators in the US is in the rise, although the
growth has slowed down significantly after a very high rise
in 2012. Startups that graduated from accelerator programs
have approximately 23% higher survival rate than other new
businesses.
Keywords Startups, Accelerators, Data Analysis,
Venture Capitalist, Startup Success
1. Introduction
1.1. Motivation
Startup accelerators have become the topic of a lot of
discussion in the media lately. Because of their novelty, they
have not been studied as thoroughly as other forms of
business mentorship programs such as small business
mentorships. Many experts have made remarks on whether
the accelerators are good or not. For example [10], [11] says
that 90% of the accelerators fail but do not provide any form
of concrete data to back it up. Few like [12] have taken
specific accelerators and shown their successes. However,
the availability of analysis of aggregate of accelerators was
missing. This paper fills that gap by exploring startup
accelerators (or accelerators), by understanding their
successes and their growth trends.
1.2. Introduction to Accelerators
Accelerators are organizations that help nascent ventures
get a jumpstart by providing them with funds and resources
in exchange for partial equity of the company. Unlike other
business assistance programs, they have a competitive
application process. Startups are required to answer
questions about its business model, and founders. Some
accelerators such as Y-Combinator are so competitive that
less than 3% of the applicants are selected [7].
Most startups face problems such as lack of experienced
management, processes and resources. The problem is
compounded by the fact that technology startups usually
require a lot more resources in the development phase[4] . As
such startups need a partner that understands the perils of a
startup and is willing to take various forms of risk with the
startup. Startup founders usually are unable to produce
enough collateral for a traditional business loan[1] because
of expensive nature of technology development. Hence, most
of the startups are funded by Venture Capitalists at the
growth phase. However, recent trend shows that VCs invest
more on later stage startup and the dollar amount of
investment usually exceeds 1-2 Million Dollars[5]. As such
the need for organization willing to help startups in their
early stage with small sums of money and other resources
arises. Accelerators fill that need. Accelerators support
startups until they are ready to acquire VC funding.
1.3. What do Startups Get Out of Accelerators?
Paul Miller and Kirsten Bound, two graduate students in
the UK conducted several interviews to find out what
founders felt like the best advantage of joining an accelerator
program. Some of the answers of the founders are explained
below:
1.3.1. Funding
Miller[1] reports that most founders agree that funding is
one of the main advantage of joining an accelerator. Having
funds helps founders focus on the startup rather than making
lives meet. This is essential since speed to commercialization
is of essence for any startup.
1.3.2. Networking with VCs
Accelerators offer unparalleled access to the investors.
Most offer face to face sessions with venture capitalists in
addition with the graduation day when each startup is
Universal Journal of Industrial and Business Management 3(2): 54-57, 2015 55
allowed to pitch their idea to a crowd of investors.
1.3.3. Product Advice/ Business Advice
Accelerators offer exposure to other founders. This allows
new founders to get feedback on their product and business.
This advice is much more valuable to the new founders
because it comes from seasoned founders that have been in
their shoes.
1.3.4. Validation
Being accepted in an accelerator is a validation that the
startup has potential. This will not only boost the founder’s
confidence, but also the credibility of his/her business.
1.3.5. Peer Support
Most accelerators have co-working spaces where founders
can interact amongst themselves regarding their experiences.
This creates an environment where founders can learn from
each other.
2. Data Collection and Criteria
The data used for this paper was extracted from
seed-db.com with the permission of the website operator.
Over 226 web pages were traversed to gather data on over
165 accelerators and over 4800 startups established since
2005 worldwide. All the startups that are included in the
dataset were the ones that had gone through an accelerator
program. Python software and Excel was used to process the
data. All the accelerators without an established date was
removed from the dataset. Data from year 2005-2014 was
used to gather information on accelerators while data from
2005-2013 was used to gather data on startups because of the
incomplete nature of startup data for this year.
3. Accelerators and Startup Growth
Trends
3.1. Growth Trends
The advent of modern day startup accelerator happened in
2005 with the establishment of Y-Combinator by Paul
Graham[7]. Ever since a lot more accelerators have been
established. The following charts presents accelerators
established to date.
As we can see from figure 1, the number of new startups
established worldwide has been steadily positive. The
growth rate of new accelerators has started to decrease since
2012.
Growth in the number of accelerators can be reflected in
the number of startups using the accelerators. The chart
below shows the number of startups graduated each year
since 2005.
As we can see the number of startups has continuously
grown since 2005. Despite the increase in number of
accelerators in 2012, the number of startups didn’t increase
in 2013.
Figure 1. Number of accelerators established
Figure 2. Number of startups graduated
Next, we compare the growth of accelerators in the US vs
the rest of the world.
Figure 3. Comparision of accelerators in US vs the world
The trends in the US and abroad are similar. There was a
big surge in the number of accelerators established in 2012.
For outside of the US, there was a big spike in 2011 as well.
2013 and 2014 saw a pretty steady increase in accelerators
outside of the US.
Next, we look at the trends in startup graduation in the US
vs abroad.
56 Data Driven Analysis of Startup Accelerators
Figure 4. number of startups graduated per year
The number of startups outside of US continues to see
continued growth. US saw the largest number of startups
established in 2012. There was a slight decrease in the
number in 2013.
3.2. Discussions
There is no doubt that there is a continuous growth of both
accelerators and consequentially the growth in startups. The
growth in accelerators seems to be slowed down both in the
US and abroad. One of the potential reasons for the slowed
growth could be saturation in the market of accelerators, i.e.
there isn’t enough market for any more accelerators. At the
moment, there are 88 accelerators in the US.
Another potential reason can be because of expanding
operations of accelerators. Recently, many accelerators are
expanding into other cities and countries. Hence, instead of
the new accelerators being started, existing ones are
expanding to newer locations. This is particularly true for US
accelerators. Many of them have programs in two cities in
the US. Here is a small list of global accelerators:
- DreamItVentures (US, Isreal)
- HAXLR8RLink(US, China)
- Oxygen Accelerator(US, UK)
4. Survival Rate of Startups graduated
from accelerators
One criterion to understand how well the accelerators are
doing is to measure weather the startups are surviving longer
as a result of participation in the accelerator. For a startup to
be considered survived, it has to be operational or be
acquired by a different company (exited). In this model of
measureing accelerator success, if the startups survive longer
as compared to other business, the accelerator model is
considered valuable. Our baseline comes from two sources.
The Bureau of Labor Statistics data shows that 49% small
businesses survive 5 years or more [8] and Census data
reports that 69% businesses survive 2 years or more[9].
The table below shows the current success of startups
established at 2012 or before.
Tab le 1. Success beyond 2 years
Success beyond 2 years. [estd at or before 2012]
US Abroad Total
US Small
Business
Operating 1545 662 2207
Exited 206 24 230
Dead 234 64 298
Success% 88 91 89 70
As we can see in the table above, the startups that
graduated from an accelerator program in the US have
almost 26% better odds than a normal US small business.
The table below shows the current success of startups
established at or before 2009.
Tab le 2. Success beyond 5 years
Success beyond 5 years [estd at or before 2009]
US Abroad Total
US Small
Business
Operating 76 7 83
Exited 42 3 45
Dead 65 3 68
Success% 64 77 65 49
As we can see in table 2, startups that graduated from an
accelerator program have almost 23.5% better odds of
surviving than a normal US small business.
From Table 1 and 2, we can conclude that the accelerators
are doing really well for the startups. Additionally it is
interesting to note that the startups abroad are more
successful than the startups in the US. One of the possible
reasons for this is because startups abroad have a smaller
accelerator to startup ratio. The table below shows the startup
to accelerator ration in the US and abroad. The table uses all
the accelerators established vs. all the startups established
before 2012.
Table 3. Startups to accelerator ratio in US vs Abroad.
accelerator startups ratio
US 88 1985 22.5
Abroad 77 750 9.75
As we can see (table 3), the ratio of startup to accelerator is
much smaller abroad than in the US. This potentially
provides more attention to the startups abroad than the US.
5. Conclusions
In conclusion, the startup accelerators are doing great for
the startups. They are a great resource for both funding and
business expertise that a startup can use. Figure 1,2,3 and 4
shows that the growth in number of accelerator established is
slowing down after the big peak in 2012. Possible causes for
Universal Journal of Industrial and Business Management 3(2): 54-57, 2015 57
this decline can be either market saturation or expansion of
existing accelerator program into different locations. Tables
1 and 2 show that accelerators increase the odds of a startup
survival by around 25%. The startups abroad have a better
success rate. One of the possible reasons is smaller startup to
accelerator ratio abroad as compared to the US. In summary,
accelerators are helping create value to the startups and
helping them succeed and the accelerator model of business
mentorships seems to be performing better than other forms
of business mentorships.
6. Recommendations for Future Study
Below are the recommendations for future study.
1. Accelerator’s income is not considered. It could be a
key marker of success for accelerators.
2. Startups’ income or exit value is not considered. Such
a consideration will increase the insights on how they
are doing.
3. Negative effects of accelerators should be studied.
Acknowledgements
We are very grateful to seed-db.com’s founders. Without
the data collected by them, this paper wouldn’t have been
possible.
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from Quora:https://www.quora.com/Whats-the-success-rate
-of-startups-that-have-been-funded-by-Y-Combinator
... He surveyed 100 Accelerator graduates and created a shortlist of the five aspects of Accelerator provision they valued most highly 1. Links to sources of funding, 2. Brand, 3. Business, 4. Product, 5. Startup financial support (Fowle, 2017). Other authors focus on how different stakeholders (startups, accelerator managers, investors or policymakers) may have different priorities when measuring accelerators´ impact (companies´ survival rates, revenues, average returns, or job creation) (Regmi et al., 2015) and others focus on how to measure the success of accelerators in New Zealand. These recognize that the process for measuring success in an accelerator programme is something to be reviewed as it may not be accurate. ...
... (Crișan et al., 2021), (Blair et al., 2020), (Battistella et al., 2017), (Del Sarto et al., 2020) ES4 Q7.-What percentage obtained funding from private investors/venture capital funds? (Fowle, 2017), (Bone et al., 2019), (Gutmann et al., 2019), (Astapov & Zhdanov, 2022), (Kupp et al., 2017), (de Klerk et al., 2024), (Seidel et al., 2016), (Denysenko et al., 2023), ( (Regmi et al., 2015), (Taufiq & Yesseleva-Pionka, 2022), (Mungila Hillemane, 2020), (Clingingsmith et al., 2023), (Yagüe-Perales et al., 2024) With regards to Research Question 2, relating to the business acceleration programme ("Methodology and research questions" section) Shown in Fig. 2 ES3 Q1. Indicate the services included in the acceleration programme (Yusubova & Clarysse, 2016), , (Badulescu et al., 2022), (Cohen et al., 2019a, b Data availability The data that has been used is confidential. ...
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The Startup Factories
  • P Miller
  • K Bound
P. Miller, K. Bound. The Startup Factories, Nesta Publication, 50-53.
Analysis of Accelerator Companies: An Exploratory Case Study of Their Programs, Processes, and Early Results
  • D Hoffman
  • N Radojevich-Kelley
D. Hoffman, N. Radojevich-Kelley. Analysis of Accelerator Companies: An Exploratory Case Study of Their Programs, Processes, and Early Results, Small Business Institute Journal 2012, Vol. 8, No. 2, 54-70
Portfolio Company Selection Criteria: Accelerators vs Venture Capitalists
  • C Chang
C. Chang. Portfolio Company Selection Criteria: Accelerators vs Venture Capitalists, 2013, CMC Senior Thesis. Paper 566. http://scholarship.claremoung.edu/cmc_th eses/566
Portfolio and Information Disclosure: An Analysis of Startup Accelerators
  • K Jin-Hyuk
  • W Liad
K. Jin-Hyuk, W. Liad. Portfolio and Information Disclosure: An Analysis of Startup Accelerators, Midwest Finance Association Annual Meeting Paper, 2013.
Running a Hatchery for Replicant Hackers
  • Jennifer Lee
Lee, Jennifer. Running a Hatchery for Replicant Hackers, New York Times, published February 21, 2006
An Overview of the Kauffman Firm Survey: Results from
An Overview of the Kauffman Firm Survey: Results from 2011 Business Activities, Prepared By: Alicia Robb and Joseph Farhat, June 2013.
90% of Incubators and Accelerators will Fail and That's Just Fine for America and the World
  • Peter Relan
Relan, Peter, 90% of Incubators and Accelerators will Fail and That's Just Fine for America and the World, TechCrunch, October 2012.
Most Accelerators Will Fail, So Choose Wisely
  • Austin Carr
Carr, Austin. Most Accelerators Will Fail, So Choose Wisely, FastCompany.com.
Whats the success rate of startups that have been funded by Y Combinator?
  • N Jorgenson
Jorgenson, N.M Whats the success rate of startups that have been funded by Y Combinator? Retrived February 18, 2013 from Quora: https://www.quora.com/Whats-the-success-rate -of-startups-that-have-been-funded-by-Y-Combinator