As I wrote in my last post, I am writing my master’s dissertation on Y combinator and the similar programs it has spawned. Y combinator is a really interesting program, but I think simply copying it and starting it in a different city isn’t the best way to do it.
This post will detail how I’ve structured the dissertation thus far, and ask for your help!
Request for help
Are you interested in startups, or have you been involved in a startup? Then I would love it if you could take my survey. I’m looking to get some data around what people really want out of a program like Y combinator.
*** Please click here to take the (very short) survey! ***
Secondly, in my draft papers I’ve been using the words “startup incubator” but really don’t like that term. Incubator implies a central office space, which isn’t part of some of these programs. I’ve also thought of “startup accelerator”, “startup boot camp”, but they don’t seem quite right.
If you have any suggestions for a better general name for these programs, please let me know in the comments section below!
My dissertation
The first step in the project was to get a handle on what programmes exist, how they’re structured, what companies they’ve funded and what kind (if any) exits they’ve had. It’s taken a lot of research, but I’ve developed the following files:
List of programmes — https://docs.google.com/Doc?docid=0AUkhSN3vaY4jZG1xenptZ18xMmZjcDdnN2M4&hl=en
List of funded companies — https://spreadsheets.google.com/ccc?key=0AkkhSN3vaY4jdF90b1l1Vnl5NmZjaTBNQWlJYVozMEE&hl=en
The biggest “holes” in the data are some missing company names from Y combinator, and a general lack of awareness of follow-on funding from all programmes (except TechStars and Seedcamp).
My goal is to establish a framework for thinking about startup incubator programmes. To do that, I’ve evaluated the needs of both types of participants: the programme founders and the entrepreneurs. What I’ve developed is this:
Entrepreneurs want:
- Seed funding / Financial support
- Product support (making product better)
- Business support (how to run a business)
- Connections to future sources of capital
- Brand connections (and alumni connections)
Programme Founders want:
- Financial return
- To enjoy startups without the same risk/working hours
- Local/regional influence
- High-quality deal flow
(I’m currently working to verify and quantify these assumptions, and would appreciate any feedback in the comments below.)
There are a number of complications in setting up these programs, however. Mainly:
- Non-financial goals (on part of programme founders) –
- Particularly when a significant part of the funding comes from the government which has clear non-financial goals.
- Location: where people want to live/work (and where they’re legally able to live/work) –
- This is a question of desires in personal life versus efficiency and opportunities in business life.
- Follow-on funding, where programme founders fund some of their companies but not all for further development –
- This is a serious consideration depending on the angels/VCs involved and the structure of the program.
That said, there are a lot of areas for innovation when setting up future startup incubator programmes. Namely:
- Focus on industry vertical or particular scope of technology
- Length of programme
- Funding level
- Scope of education programme
Where this is all going to lead is a framework and recommendations for people or groups that want to start a startup incubator.
My biggest recommendation thus far is straightforward. What will make a new programme so compelling that founders would want to choose it over any other? That likely will not be because of the location, despite the fact that most Y combinator clones seem to be just that: Y combinator in a different city. But if a new programme can do something unique, like build an incubator around database technology, or sensing technology, or enterprise customers, or something else it could be a very compelling opportunity for entrepreneurs.
Decisions around industry verticals or technologies then lead into decisions on levels of funding and length of programme. While most programmes have copied Y combinator’s $15–25k for 5–10% equity, there is a lot of scope to change this when the programme isn’t just funding web applications.
Summary
This is what I’ve written thus far, and look forward to your comments and suggestions! If you’d like to get in touch with me privately, please contact me by clicking here.
Jed Christiansen 