Is there value in participating in a startup accelerator program?
There’s reason to believe that the answer is yes. To date, startups that have participated in one of the 200 such programs have raised a combined $20 billion in funding since 2005, according to data published on Friday by Jed Christiansen, a product manager at startup accelerator Techstars and who also runs an online database about accelerators.
Over the past decade, startup accelerators, which select small groups of promising startups and provide them with resources like mentorship, business advice, and often even funding, have increased both in popularity and number.
Of course, a few exceptional outliers are responsible for the huge cash haul. Airbnb, for example, which graduated from the prestigious Y Combinator program in 2009, has raised almost $4 billion in debt and equity funding to date. Video gaming network Twitch and self-driving car startup Cruise Automation, both of which also participated in Y Combinator, have been acquired for almost $1 billion each.
Overall, accelerator alums have been responsible for more than $5 billion in exits, venture capital jargon for acquisitions or going public. Those that are still operating privately are valued at a combined $80 billion.
Pitchbook, an investment database, also found that one-third of startups that raised a Series A round in 2015 previously graduated from a startup accelerator. This suggests that participating in one increases the chance that a startup will “succeed” (if we define success as growing and continuing to raise funds), since these startups account for around 10% of all startups founded in the last few years, according to Christiansen.
But that still raises the question of whether these startups are succeeding because of the coaching and knowledge they gain through the accelerator programs, helping them build businesses attractive to investors—or if the accelerators’ brands are acting as a stamp of approval to investors.
I’d bet the accelerators would argue it’s the former, of course.
Kia Kokalitcheva
This is the Startup Sunday edition of Data Sheet, Coins2Day ’s daily tech newsletter, edited by reporter Kia Kokalitcheva. You may reach me via Twitter, email, or an entirely new platform that your startup developed. Feedback welcome.
Everyone's Talking About
Zymergen. The three-year-old biotech company scored a $130 million funding round led by SoftBank to expand its work on producing industrial chemicals from single-cell organisms, or microbes. Zymergen's big round also shows that the downfall of blood-testing company Theranos hasn't entirely wiped out investor interest in biotech startups. (Coins2Day)
Unicorn Watch
Palantir defends itself against discrimination lawsuit. The secretive data crunching company hits back at allegations of discrimination, arguing that the Department of Labor's analysis of its hiring of Asian candidates is flawed. (Coins2Day)
Pinterest now has 150 million monthly active users. The online service for collecting images continues to add users, many of them from outside the U.S. (Coins2Day)
Theranos hit with an investor lawsuit. San Francisco hedge fund Partner Fund Management has sued the company for securities fraud. (Coins2Day)
Uber worked closely with Pittsburgh mayor to reduce state fines. Emails reveal the behind-the-scenes work. (Motherboard)
The Week in Startups
Dating App Hinge’s New Incarnation Is for Millennials Looking for a Serious Mate (Coins2Day)
Another Car Rental Service for Uber and Lyft Drivers Suspends Operations (Coins2Day)
Morgan Stanley Backs PayPal Co-Founder’s Lending Startup Affirm (Coins2Day)
Meet Jordan Hewson: The Tech Entrepreneur Who’s No Longer Just ‘Bono’s Daughter’ (Coins2Day)
Hyperloop One Raises Another $50 Million for Full-Scale Test (Coins2Day)
Electric Car Startup NextEV Kicks Off Its Silicon Valley Office (Coins2Day)
Free Savings Tool Digit May Start Charging Users for Some Services (Coins2Day)
Money-Losing Meal Delivery Startup Munchery Seeks New CEO (Bloomberg)
Soylent Bars Recalled After Some Customers Get Sick (TechCrunch)
Pluto TV, a Free Streaming Service for Cord Cutters, Raises $30 Million (TechCrunch)
Words of Wisdom
"I have found that feeding doesn’t change behavior very much. It works well in the short run (do this and we will invest more money). But it doesn’t work very well in the long run. Caring, on the other hand, has immense power to bring positive change." — Union Square Ventures partner Fred Wilson, on the two things (money and support) investors can give their portfolio companies. (Wilson's blog)
One More Thing
The growth of tech industry jobs vs. Housing. With the continuous growth in tech and startup jobs, the Bay Area is struggling to meet the demand for housing, but some cities "aren't pulling their weight" more than others. (Curbed)
