Y Combinator vs TechStars: Whose Companies Are Bringing In More Funding?

http://techcrunch.com/2011/12/11/ycombinatortechstars/

by tilt • 15 years ago

60 38 15 years ago

This analysis would be more interesting if it were more sophisticated. At the very least, the metrics could be normalized by the number of companies.

garry• 15 years ago

Notably, median money raised after seed funding is normalized, as it is not scaled by the number of companies.

swanson• 15 years ago

Can a reality show - that several of the founders involved with have spoken negatively of - really be an advantage for TechStars?

Also, why do the plot areas go above the maximum axis labels?

leelin• 15 years ago

Wait, Bill Clerico from WePay was on Millionaire Matchmaker... that's gotta count!

davidedicillo• 15 years ago

I wish they were also showing the amount of profits generated by the startups. The amount of founding doesn't translate directly in success...

B0Z• 15 years ago

HN is more populated in recent weeks with TC titles which would make it less read by some. Maybe the name should change from Hacker News to Crunch News or Hacker Crunch. :: eyeroll ::

te_chris• 15 years ago

More funding? Who cares, how about whose companies are making more revenue and holding onto more of their equity?

TamDenholm• 15 years ago

I think the better question would be, whose companies are making more money, rather than raising it to spend.

tlb• 15 years ago

That is the better question. Unfortunately the revenues of startups are usually trade secrets. Funding events are based on investors looking at revenues, so they're the best indication available.

phil• 15 years ago

It's probably a pretty good proxy. The charts in the article are dominated by a few huge investment rounds that resemble privately offered IPOs. If you think going public would be a good indicator of success, that's closer to what's going on in those charts than it appears at first.

webwright• 15 years ago

First off, that data isn't (and will never be) available for new-ish startups.

Young, high growth startups often have irregular revenue and no profit. The early years of Facebook would've shown weak revenue and no profit. Most smart people knew that it had a disproportionate shot at big returns long before it had meaningful revenue.

binarysolo• 15 years ago

Neat little comparison and nice tidbit of info derived.

But as a fellow data scientist, the choice of bar graphs to represent this compact bit of info really just feels like padding to the article which could really use a bit more analysis.

munaf2• 15 years ago

Obviously measuring success by capital raised is silly. Is there a better alternative? Some function of pageviews (for more 'social' companies) vs. money raised? Tough to say.

In any case, I wouldn't read much into the OP.

stretchwithme• 15 years ago

how about profits earned?

munaf2• 15 years ago

I meant in lieu of having full access to their books.

jot• 15 years ago

I'm thinking the first version of Justin.tv makes YC and TechStars even on the reality TV show front. Have a feeling it turned out better too.

jamgraham• 15 years ago

shouldn't the focus be on profitability rather than funding.

whenisayUH5• 15 years ago

While I appreciate the attempt, this was pretty shoddy data analysis. First, Crunchbase's data is pretty bad. I saw a spreadsheet floated around some time ago that had a lot more YC companies listed on it (~200) so this is def not comprehensive. I'd imagine their TechStars data is even less complete given they tend to cover TS less than YC.

In terms of the analysis, some attempt to normalize the data would have been good.

Also, time-series figures would be more interesting as it would help show which program might be gaining or losing momentum.

In general, the idea of total funding being the best metric is laughable given how a few outliers skew the data.

It would have been interesting to see how quickly companies raise after the programs conclude. In a sense, analyzing by vintage/class would be more useful.

And then to conclude with the following "Y Combinator beat TechStars in many of these metrics, but none of these numbers translate to which (if either) is the best fit for your startup. That’s for you and them to figure out."

If your going to do some data analysis, try to make it actionable/useful and stand by it or take an opinion vs just a shallow attempt at data analysis which you neuter with caveats.

swombat• 15 years ago

It would have been interesting to see how quickly companies raise after the programs conclude.

A bit harsh on TS, considering every YC startup automatically raises an extra $150k right away...

whenisayUH5• 15 years ago

TS also something similar. All TechStars companies can get $100k.

http://www.businessweek.com/smallbiz/running_small_business/...

LogicX• 15 years ago

This: http://bit.ly/PuRFj is the referenced work which leads to google spreadsheets with the data...

Spreadsheet link: http://goo.gl/fDZB

goodweeds• 15 years ago

How about an analysis as to which companies have created more jobs or generating more revenue?

pg3• 15 years ago

"Another metric would be valuations — are companies becoming more valuable over time? — but we also don’t have good access to that."

That is the real test, and we've published those numbers:

http://ycombinator.com/nums.html

(The number I quoted in June is now out of date. The combined value of the top 21 companies we've funded is now slightly over $7 billion, and the average value of all the companies we funded up to summer 2010 is thus about $33 million.)

whenisayUH5• 15 years ago

PG - What is the median valuation of those fundraising rounds? Averages are not a great metric because the few big valuation winners (Dropbox, Airbnb) skew the average big time and bring up the "normals" a ton.

If Airbnb is valued at $1B and if there are 200 YC alums who've raised, that adds $5M to the "average valuation" of each YC startup. (I know those #s are not right but just for purposes of the example).

Those median valuation figures available?

byrneseyeview2• 15 years ago

For funding, the median is less useful. I wouldn't be surprised if the median series A returned a loss.

If optimizing for the median outcome is your goal, VC funding is probably not a good plan.

pg3• 15 years ago

I assume the median valuation will ultimately be zero. I.e. I'd be delighted if the success rate of companies we funded was as high as 50%.

bravura• 15 years ago

I assume that the objective measure that we ultimately care about is exit valuations, correct?

Are there any studies that demonstrate the amount of correlation between money-raised and exit valuations?

With that information, it would be easier to judge how informative it is to use money-raised as a surrogate for the true objective criterion.

pg3• 15 years ago

Are there any studies that demonstrate the amount of correlation between money-raised and exit valuations?

Yes, many. That's what any study of the returns of venture funds is measuring. And since the returns of the top venture funds are consistently at least positive, we can be fairly confident that $7 billion is a lower bound on exit valuations.

dudurocha• 15 years ago

Maybe they could use revenue as a metric. but I thinks its not very important regarding startups...

lambtron• 15 years ago

techcrunch analysis should standardize their metrics with dividing by total number of startups funded. in addition to including revenues/profits, etc.

Y Combinator vs TechStars: Whose Companies Are Bringing In More Funding?

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