$10 Billion

Ten years after the seed accelerator model was pioneered, Seed-DB has now identified over $10 billion that has been invested in accelerator graduates. Over 200 seed accelerator programs around the world have funded nearly 5000 companies, and over 300 companies have already exited for a total of over $3.5billion. The total valuation of companies that have come through accelerators reaches in the tens of billions of dollars. If you don’t believe that accelerators are a relevant way for early-stage technology companies to get funding and started… you’re sadly mistaken.

How has this happened?

To quote Ernest Hemingway (via Chris Dixon’s great post): “Two ways. Gradually, then suddenly.”

The first accelerator, Y Combinator, only started ten years ago. Techstars’ first class was in 2007, DreamIT Ventures in 2008, AngelPad in 2010, and 500startups in 2011. Most of these only funded handfuls of companies to start. Those early starts have compounded to create a juggernaut of high-quality startups getting funding. And as mature growing companies are able to find plentiful later-stage capital in the current environment, large funding rounds are becoming commonplace. Here’s what’s happened over time:

Top accelerators are now brands themselves, and their stamp of acceptance and access to their networks is self-reinforcing. While $10billion in total funding is an impressive milestone, companies that have gone through accelerators comprise only a small portion of the total venture funded startup scene. There is a lot of space for their influence to grow.

Top tier programs

76% of all venture capital funding of seed accelerators go to graduates of just five accelerator programs: Y Combinator, Techstars, 500startups, Angelpad, and DreamIT Ventures. But there are three parts to this: quality, quantity, and longevity.

An accelerator needs to be of a sufficient quality in order to help their companies become investable. That accelerator needs to fund a relatively high number of startups in order to have a meaningful impact in aggregate. (Either by funding more per year, or steadily accumulating a portfolio over time.) The longer a program has been in operation the bigger their companies can grow.

This is not to say that new programs won’t break into this top tier… just that they need more time.

Funding — a Power Law in action

If you search for [venture capital] and [power law], you’ll see that venture capital is an industry known to follow a power law… and power laws encompass the phenomenons of the “long tail” and the Pareto principle (aka 80–20 rule). This holds true for the world of seed accelerators, too. The following is a chart of the funding that the 939 companies that have raised the most venture capital after going through an accelerator (so ~20% of all accelerated companies).

This is a pretty extreme power law; Dropbox has raised over $1billion in funding alone, but hundreds of companies have raised between $1million and $10million in funding. (And thousands have raised seed rounds of <$1million). Let’s see what happens when we check for a real power-law relationship by plotting both axes on log scales.

The result is a straight(-ish) line, which means venture funding of accelerator companies is a power law relationship. (The math to prove it is fairly complicated and outside the scope of this post.)

But… do accelerators accelerate?

This is a very difficult question to answer. Luckily there are some very smart researchers trying to quantify this. Ben Hallen, Chris Bingham, and Susan Cohen have done some great work in trying to answer this question. Essentially they’re trying to determine if companies that have gone through accelerators reach key milestones faster than companies that haven’t gone through accelerators.

They haven’t yet published their paper, so I’m not going to steal their thunder. But their work should put the analytical horsepower to confirm (and disprove) various theories on accelerators.

I want to note that Yael Hochberg is another researcher in this field to watch; she and Susan Cohen lead the Seed Accelerator Rankings project.

Data Disclaimer

All data on company funding comes from Crunchbase. Some companies don’t enter funding information in Crunchbase, and others don’t even have Crunchbase pages; in those cases the total funding would be even larger. Additionally, I know a number of accelerators have funded companies that aren’t yet listed on Seed-DB; I continually work with programs to help make sure data is accurate but inevitably the data for many companies will be missing.

Also, I pulled the data above earlier this week in order to write this post; it’s already out of date with the funding rounds raised this week. (Three Techstars companies announced over >$100million in funding within 48 hours this week, for example.)

Personal Disclaimer

I did my first research into accelerators in the summer of 2009, and created Seed-DB in the summer of 2012. One year ago I started working for Techstars as a Product Manager. This post represents my personal views, and not those of Techstars. All data comes from Seed-DB alone.

[Check out the discussion on Hacker News]

Going to California…

My wife and I have recently made a big decision. After over eleven years living in London, we’re moving back to the US… to the San Francisco/Bay Area of California!

Wait… what?!?

If we haven’t caught up with you in a while, my wife started working for Google about a year ago in London. A few months later, I left Google to join Techstars (but still based in London). We’ve both been really, really happy in our respective jobs, and the changes have opened up new opportunities for both of us. At Techstars my role has shifted, and I’m leading a product team building applications and tools to help our founders leverage the Techstars network and “do more faster.” And at Google, Annie has been kicking ass and been offered an opportunity to transfer within her team for an important role… but one based in California.

But why??

Frankly, it’s great for both of us professionally to make this move. But it’s not just that, it’s also to be closer to family. For any of our immediate (or even distant) family to visit us, it takes them 6–10 hours of flying and a substantial amount of cash for the transatlantic flight. As our daughter grows, we want her family not to be some abstract concept that she sees on the other side of a FaceTime, but people she knows and loves as she grows up. (We’ve also gotten to be rather jealous of our British friends whose families can help with babysitting far, far easier than ours can!)

There’s a myriad of reasons why we’re doing this, and it’s a bit different for Annie and me. (They range from more sensible school options to being better able to buy a home for ourselves to seeing our UK friends move to the countryside…) But we’ve considered them all, and a move to California is what’s best for us right now.

How are you feeling about this?

I’m very excited for the move, but I’m very sad and frankly a little anxious.

I’m excited for new opportunities (professionally and personally), excited to spend time with old friends that we haven’t spent much time with in years, and excited for new experiences in general.

I’m incredibly sad to be leaving our friends here in London and the UK. Annie and I have spent the majority of our adult lives in London, and we’re gutted that we’re going to have to say goodbye (at least for now) to our friends. That said, we’ve committed to ourselves to visit as frequently as we can. (Probably for Henley every year at least!) And we’ll certainly be back at some point to live in the UK again.

Finally, I’m anxious because there are a lot of things I’ve never had to deal with in the US… like health insurance! (Between the Navy and the NHS here in England I’ve been spoiled when it comes to healthcare.) Frankly, I think I’ll feel like an ex-pat in my own country for quite a while.

When is this happening?

We’re wheels up from the UK at some point in the last couple weeks of March… so less than six weeks away. (Yikes!)

Whoa… I think I need a drink

And I’d say I agree. In the selfish interests of seeing as many people before we go, we’re going to have a party on the afternoon of Saturday, March 7th. Get in touch if you’d like to know more details; we’d love to see you there! 🙂 (A Facebook invite will be going out shortly.)

Finally, I’ll just leave you with this brilliant (and relevant) song from a legendary band…

Startups want *operators* — what about Special Forces?

First thread: I try to go out of my way to help current and recent military members to transition to civilian jobs and careers. I remember how tough it can be to translate the very rich experiences I had in the Navy to something that most employers could understand. And it’s usually tougher the longer you stay in the military.

Second thread: What I see pretty much each day at Techstars is the value that startups place in execution. The people who can consistently get things done and fight their way through difficult situations are hugely valued. They can get far more done per dollar and thus have a greater chance to both survive and thrive given each incremental investment dollar.

These two threads collided for me today.

Special Forces?

I’ve gotten to know a few different special forces operators in my time during and after the military. My boss for about a year was a Navy SEAL that went on to command a Navy SEAL team. They’re both tremendous individuals, but also strangely normal people, too.

Today I met a Special Forces operator, with over ten years in the SAS. (Equivalent to Delta Force, SEAL Team Six, etc.) He’s a really smart and accomplished individual, who for years has done nothing but operate. He’s gone on virtually no notice to countries where he and a team would be required to evaluate current situations, make plans, and execute those plans, often under tight time pressure and imperfect information. And in places where if you screw up, you (and others) could die.

This person is also interested in branching out from the traditional security/policy/government roles that recent military retirees often fall into. (This is a bit unusual, but I think very highly for him in proactively thinking and researching how to make the switch.)

I think this particular person is a specific example of a broader idea. Special forces operators regularly “retire” from the military in their 20s, 30s, and 40s with incredible expertise, but often little commercial experience. So while the guy I talked to today could probably easily step into a COO role and has the operational expertise to warrant the role, his lack of direct business experience means that he wouldn’t ever be reviewed. It feels like the world of startups is missing out on a category of potential key employees, that could radically improve their chances for survival, because they can’t translate individuals’ military experience into something startups understand.

(Side notes: Techstars operates Patriot Boot Camp for US military and military veterans, and I think highly of the program. We’ve also invested in at least one company that was founded by a Navy SEAL: FitDeck, founded by Phil Black, which went through the Nike+ Accelerator, powered by Techstars.)

My questions

Broadly — How can/should startups think about hiring people with non-traditional operations expertise? Would startups be willing to hire special forces operators? Would they be willing to take someone on for a 3–6 month trial to evaluate their operations ability? What would it take for startups to seriously consider special forces operators on a regular basis?

Specifically — What roles should a person like this consider? What are the job titles he should be on the lookout for? Should he go get an MBA and use that to help transition?

I would love to hear your thoughts.

Trending on Product Hunt during YC’s Demo Day — the Seed-DB experience

I had a bit of a weird experience on August 19th this year.

And the circle of self-promotion closed, as Seed-DB was promoted on Product Hunt, driving people to see the YC listing on Seed-DB, which showed users that YC’s class had Product Hunt in it.

What does this mean for stats? Well, let’s go to Google Analytics. Here are the hourly pageview stats for the week on either side of trending on Product Hunt:

I think the first spike came after initially trending on Product Hunt, and the second spike came after the Product Hunt daily e-mail was sent. How does this compare to Seed-DB’s traffic across the year? Well, it was by far the biggest spike:

And here are the stats from the “referral” acquisition channel for a week on either side of August 19th. Product Hunt drove over 2000 people to Seed-DB:

Since then…

Product Hunt has grown massively since then, and would now probably drive an order of magnitude more traffic for the top trending products. For me, August 19th was a bit of a surreal day but was pleased about the coincidence in the timing.

I was recently going over the statistics, and Seed-DB has grown virtually every metric by 30–40% compared to 2013. While I could look at that in startup terms and say “meh”, because I don’t do any marketing of the site I’m pleased that more and more people are finding it and finding it useful. I’m going to be adding a few key features in the coming months, so please stay tuned!

No regrets… ever

definition of regret:

re·gret — r???ret/


1.feel sad, repentant, or disappointed over (something that has happened or been done, especially a loss or missed opportunity).

One of the principles I use to live my life is simple: have no regrets. I believe this has made me a happier person, and has allowed me to turn decisions that might eat away at me into lessons that I can use to make better decisions in my future.

An example

A big decision that I made relatively early in my life that has had massive consequences for me was the decision to accept a Navy ROTC scholarship in the senior year of high school. Doing this meant that when I graduated in 1999 I entered the Navy, instead of potentially going to work in the nascent internet industry (or somewhere else). I was effectively locked into six years of Navy service instead of participating in one of the craziest times of the internet’s growth.

But while I could regret the opportunities I passed up, I also have to recognise the transformational experiences I did have in the Navy. At 23 years old I was put in charge of a nuclear reactor. At 24 years old I was running a $2billion submarine and responsible for safety of 130 crew members’ lives. And because I had my ROTC scholarship, I graduated with zero college loans or any other financial burdens. So while I might have been able to be a part of the internet’s wild ride, I actually did start my career with some very unique experiences and a decent financial footing.

(That said, at the time I was a huge Google fan and user… partly because I got to Michigan just after Larry Page left and knew people that were friends of his. If I had managed to convince Google to hire me around the time I graduated in 1999, I would have been anywhere from employee number 15 to 60. That could have been… lucrative.)

How I think about potential regrets

So while I have made a number of decisions in my life that if I look back I might do differently, I remember that each decision was made with the best information I had available at the time. The benefit of hindsight is information that you never had when you actually had to make the decision! Where I would have chosen to do something differently I analyse what I wish I would have known to figure out if there are ways I should systematically do more research or think differently about categories of decisions. Then I can take any lessons from those situations and apply them to future decisions.

Having this attitude has made me a lot happier. I have made a conscious decision to have no regrets, which allows me to focus on the benefits I’ve had from the decisions I’ve made. The only control I have in life is over the decisions I’m making right now, today. Regret is simply a waste of time and energy.

Highly recommended read — “The Martian”

I originally heard about “The Martianvia this tweet from Clay Bavor, a VP for Product at Google. As he wrote:

If you’re an engineer, you must read The Martian.

If you’re into space, you must read The Martian.

If you’re an engineer AND into space…

That was intriguing enough to pick it up, and I’m so glad I did. It was a brilliant read, and the story has stuck in my mind ever since.

The premise of the book is simple: a team of astronauts travel to Mars. But they have an incident and need to leave quickly. One of the crew looks like he died in the incident, and they are forced to leave without him. Except he wasn’t dead, and he has to learn how to survive until he can be rescued.

For an engineer or anyone who enjoys some of the technical details of space travel and survival, this book is incredibly well researched and has just the right enough depth of detail to make it very realistic, but without going so far as to come across as a textbook. But it doesn’t just focus on what people might assume would be the problem of survival on Mars (air, water), he also deals with the smaller but critical systems, too.

The story itself is a thriller… it has just as much or more momentum than a Baldacci / Lee Child / John Grisham novel. The story takes place on Mars, on Earth, and in between with the crew members that left. It’s very well crafted, and you literally never know what’s going to happen next. The benefit of the setting of survival on Mars is that the writer was completely free to think up highly plausible scenarios that could kill any astronaut… and he does!

As it turns out, The Martian (the book) is being made into The Martian (the film), which started filming a month ago. For the Interstellar fans amongst you, the film will star both Jessica Chastain and Matt Damon. 🙂 I can’t wait to see it next year.

Like Clay Bavor, I simply can’t recommend this book highly enough for anyone that enjoys space, engineering, technology, or thrillers. Seriously… go buy it and start reading it today. (Get it at Amazon.com / Amazon.co.uk)

Accelerators and the focus on Demo Day

If you check out seed accelerators for long enough, you’ll come across one relatively consistent criticism. (Particularly for the lower quality programs, I have to say.) That criticism is that accelerators focus way too much on Demo Day. I believe that founders that say this don’t understand the real “why” behind the preparation.

I joined Techstars at the beginning of June this year, and in that time have seen the preparations for the Demo Days of the Techstars London 2014 batch of companies, as well as the first Barclays Accelerator batch of companies. So I’ve already seen, up-close-and-personal, two cycles of companies spending time and getting ready to pitch at Demo Day. And Demo Day is important: there are hundreds of angels and institutional investors there and it’s a once-in-a-lifetime opportunity for most companies. They need to work hard to make the most of the opportunity.

But the subtle secret about preparing for Demo Day is that it’s not just about one 5-minute pitch, it’s a month of deep critical-thinking about how to communicate a product, a company, a market, a team, and an opportunity. Sure, the direct output is that 5-minute pitch, but founders learn how to give a one-line description of what they do, an elevator pitch about their company, and how to talk about the company in ways that really resonate with a particular audience. This process, and particularly the feedback from experienced entrepreneurs and mentors, is critical to founders. (And while it involves the whole team, it should only be the day-to-day job of the CEO, leaving everyone else to continue working on the company.)

Let me give two examples from the Barclays program:

ClauseMatch— Evgeny from ClauseMatch was not a natural speaker, and his company (a platform for contract negotiation) is in the legal world, which tends to make peoples’ eyes glaze over. And at times, he struggled to communicate how revolutionary their product is. But he cracked it with a simple (and amusing) anecdote to start his Demo Day pitch. He took the audience back to 1995, when Microsoft Word introduced “Track changes” and e-mail started to become widely introduced. For the first time, instead of faxing manually annotated contracts back-and-forth, lawyers could e-mail Word files back and forth… it was a revolution. Then he made a simple statement: after twenty years of internet and cloud technology development, lawyers are still working the exact same way. It was a massive “a-ha” moment for the audience that grabbed their attention for the rest of his pitch.

GustPay — Werner from GustPay actually spent a bit of time at the start of his pitch talking about Disney… specifically about the NFC wristbands that Disney has developed for their theme parks. He talked about the “magic” of the experience, in that the wristband becomes their ticket and their wallet and their room key, and everything they need for their stay. Then he told the audience that Disney spent >$1billion in developing this technology, but GustPay provides the same experience for venues and events for just $1/wristband. Again, it was an “a-ha” moment that got people to recognise what they did, and why it was important.

Being able to communicate your startup to a wide variety of audiences (investors, early adopters, sales prospects, press) takes a lot of hard work. And while it may seem all that hard work is just in service of a 5-minute pitch, the real benefit is far, far beyond that.