Y Combinator Dominates Startup Accelerator Programs for Investment Value
According to PitchBook, the seed-stage investor leads other startup accelerators in most metrics, including exit value and unicorn creation rate.
When it comes to programs that help startups grow, no accelerator does it as well as Y Combinator.
According to Pitchbook’s latest report, the seed-stage investor leads other startup accelerators in most metrics, including exit value and unicorn creation rate. The report compares the performance of the nation’s five largest startup accelerators, which are cohort-based programs that provide educational workshops and networking opportunities for startup founders. Accelerators typically provide a small amount of seed investment in exchange for equity in the company.
Between 2010 and 2022, Y Combinator recorded its peak cohort exit value of $93.3 billion. This was achieved by its 2012 cohort, which included crypto exchange platform Coinbase and grocery delivery app Instacart. In contrast, the highest cohort exit values during the same period were significantly lower for other startup accelerators: Techstars at $9.8 billion, MassChallenge at $16.9 billion, and SOSV at $0.6 billion.
According to the report, the success of Y Combinator is likely due to both the high quality of its program and the expertise of its mentors. In addition, startups that are supported by Y Combinator are more likely to focus on the global market, which often results in high scalability.
In terms of the percentage of companies that have exited after they joined the accelerators, Y Combinator and Techstars have both turned in strong performances. By the end of the fifth year after they joined the programs, 18.4 percent of companies backed by Y Combinator and 18.5 percent of companies backed by Techstars had achieved a successful exit, according to the report. The figures stood at 13.6 percent for 500 Global, 6.7 percent for MassChallenge, and 5.7 percent for SOSV.
Maëlle Gavet, CEO of Techstars, said that one factor that led to the high exit rate for Techstars-backed companies is that founders can continue to benefit from the resources provided by the startup accelerator even after they leave the program. For example, founders may continue to use services that help them fundraise or find corporate partners, she said.
Around 5.8 percent of startups in Y Combinator’s 2010 to 2015 cohorts have become unicorns, which means they’re valued at over $1 billion. The unicorn rate is 2.2 percent at Techstars, 1.8 percent at MassChallenge, 1.5 percent at 500 Global, and 0.3 percent at SOSV.
Most participants in startup accelerators have been highly satisfied with their experiences. On a scale of one to 10, two thirds of participants rated their experiences as a nine or 10, according to data collected by PitchBook. Founders who rated their programs 10 out of 10 estimated that being part of a startup accelerator had helped increase their exit probability by 15 percent to 29 percent. Forty-eight percent of participants said the programs helped them a great deal when it came to raising subsequent capital, according to the report.
As venture activities slow in the current environment, the resources provided by accelerator programs are extremely valuable for start-ups, according to Vincent Harrison, venture capital analyst at PitchBook. “In light of the current slowdown in fundraising and exit activity, the importance of the resources offered by accelerators, including mentorship, networking and market validation, has increased significantly,” Harrison told II.
“Our goal is to have founders be ready for these ups and downs,” Gavet said. “And what we try to do is to surround them with the best mentors and the best partners. [It’s] even been more important during the difficult times.”