You’ve decided to launch your startup at an incubator, hoping to get a jump on fundraising. There are many other ways incubator programs add value – validating a business model, providing a physical location, creating a network, etc. But follow-on funding is the one thing almost startups want in their early stages.
If you follow the wisdom of the crowd, you’d probably try to get your startup accepted into a Silicon Valley accelerator, like Y Combinator. Let’s look at actual results to see if you were wise to heed that advice.
We used funding data from Seed-DB which has been collecting information on 145 seed accelerators and their companies. Startup databases like this are notoriously incomplete. So we had to search individual companies and plug gaps in funding reported. We believe we captured the major financings.
Looking at the total investment raised, success rate and average and median raised by companies that joined the programs in 2011, we identified eleven top performing accelerators based upon the fundraising results of 178 participating companies.
To see if incubators (which unlike accelerators do not require startups to give up equity in return for joining the program) have comparable success to accelerators, and at the risk of comparing apples and oranges, we also included the 32 startups at Cambridge’s Dogpatch Labs and Boston’s Venture Development Center.
The charts show the results based upon data as of January 2013, about 18 months after the startups joined the incubators.
To determine the best performing classes, look beyond success rate to the average and median amounts raised, and you see that the best performing classes launched at incubators in Cambridge, New York City and Boston, not Silicon Valley.
The results of course are only a snapshot of one class, during an 18 month period, and not indicative of overall incubator performance.
It will take many years for the startups graduating from the incubators to demonstrate quantitative results of any significance. But money raised is an early signal because most need funding during their early stages.