First Look at TechStars Historical Results Data | Hacker News Reader

First Look at TechStars Historical Results Data

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15 pointsdannyr12 comments

According to our data, 98/145 or 67.6% of companies we funded in s2009 or before are funded and/or profitable and/or acquired.

We don't focus on that number, though (I had to write code to calculate it) because the big returns in startup investing often come from outliers that look very risky at first. For example, Drew Houston of Dropbox, who was a single founder when we funded the company, or Sam Altman of Loopt, who was only 19. If we focused on the ratio of successes to failures, instead of the absolute number of big wins, it would make us conservative, and only pick companies we knew would be safe bets to get follow-on funding.

What do you use for feedback then.

The number we care most about is the number that become really big. It takes years to know that of course, but the number that raise series A rounds from tier 1 VC funds is a reasonable proxy (since they won't invest in a startup unless they think it will become really big).

Out of interest, how many years?

3-4 perhaps. Though interestingly enough, the bigger the company, the longer it takes to know; most people would have underestimated Google after 3 years.

Even more dramatic, Microsoft didn't release it's first version of MS DOS until it was 6 years old.

MS DOS was Microsoft's lucky break. It's not like they were established as an OS developer that needed 6 years to get noticed.

I actually expected more. I thought Google's as an example of speedy. It would have been longer before Microsoft's potential was really obvious.

I suppose that that after a certain point it doesn't matter to an early stage investor because they will have already sold their shares.

I think the ratio of alive vs deadpooled companies is something that may attract applicants.

For example, if 144 companies died and success was Google, it might have been a great return for YC, but I am not sure if applicants would see it in the same way.

Every founder believes his starup will make it big if it stays alive. So he will project his vision of success in the alive column and not care how big of a return outliers get.

Do you count tipjoy as 'acquired' ?

No, that acquisition famously fell through.

That blog post that this one links to about YC is miles off (at least for W08). 6 of the companies listed as "active" actually have received funding (7 if you include SnapTalent). I think TechStars deserves a big congrats, but this is pretty shoddy reporting.

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