A look at the fundraising success of the 10 most active accelerator programs in the US.

The following is a guest post by Samir Kaji (@samirkaji), Managing Director at First Republic Bank (@firstrepublic). 

Given the relatively small amount of capital needed to start a company within the technology sector today, we have experienced a wave of companies launched by freshman founders. Coinciding with this increase of novice founders has been the exponential growth in the number of global accelerators seeking to support these founding teams during the early stages of formation.

Most accelerators offer cohort-based structures, such as mentorship, and a network, and often a small capital investment in exchange for equity. As most accelerators take meaningful ownership stake in a company, typically 5% to 7% percent, the cost of joining an accelerator can be high.

A key driver for determining whether to join a program should be how helpful the accelerator is in making a company “fundable.” Testing this by assessing the fundraising success of companies in a given accelerator.

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To help provide a basic benchmark, we reviewed 10 of the most active accelerator programs in the U.S., according to CB Insights, based on the funding history of cohort companies.

Table One: Companies that raised at least $750,000 post-accelerator within 12 months

In the first table, the following parameters were used:

  • Exclusive of capital contributed by the accelerator, companies must have raised an aggregate of at least $750,000 post-accelerator to be considered as having raised a follow-on.
  • Companies that raised at least $750,000 prior to entering the program were omitted; however, companies that raised during the program were not.
  • This study was conducted in April 2016. We excluded cohorts that had not graduated from the accelerator before April 2015. This means they will have had sufficient time to raise follow-on funding.
  • Agnostic on investor profile.

Table 1 SK

Table Two: Companies with institutional capital that raised at least $750,000 post-accelerator

Although capital efficiency exists at the earliest stages of company formation, substantial capital is required for scale, thus necessitating institutional venture backing. In table two, an additional filter of institutional capital was included, meaning that at least one venture capital firm had to participate in a future round in order for the company to be considered as having raised follow-on financing.

Table 2 SK

The numbers aren’t altogether surprising, with Y Combinator, Techstars, and 500 Startups playing prominent roles. But here are some of our observations around the data:

Understated numbers

While the follow-on numbers may appear low for these accelerators, we think a few variables are at work.

  • Many companies — approximately 14% or 15% of the aggregate total across accelerators —  that did not qualify for our follow-on threshold did receive rounds of $750K or less are still alive and in process of raising larger rounds.
  • Many seed rounds are completed but not publicly disclosed. Private market data is infamously difficult to track when data is not self-reported consistently. While I have no hard evidence to support this claim, I wouldn’t be surprised if the accelerators listed above have internal metrics that demonstrate portfolio follow-on rates that are 10 to 15 actual percentage points higher than noted here.
  • The capital markets for larger seed rounds have remained difficult in recent years despite the growth in seed stage micro VC firms. This is especially true for inexperienced founding teams, which tend to be the most typical profiles for accelerator cohorts.

Necessary to compare apples-to-apples

While some may be surprised that companies coming out of the enterprise-focused Alchemist accelerator have received higher median funding amounts than Y Combinator, that’s easily explained by the delta in cohort sizes: Alchemist limits to 17 companies while Y Combinator has cohorts that often exceed 120 companies.

Additionally, we used statistical median versus mean in our analysis, as heavy skew would present for Y Combinator, from unicorn companies such as Dropbox, Airbnb, and Instacart. When conducting a baseline analysis, it’s important to take into account cohort sizes and sector focus of the accelerator.

Geographical proximity important for venture funding

Significant geographical advantages appear for accelerators located in major tech centers when testing for probability of cohort companies receiving venture funding. To note, Portland Seed Fund and Capital Innovators saw their follow-on rates drop by 400 percent and 200 percent, respectively, when the filter of institutional capital was applied. While the narrative of venture funding ubiquity is nice, it hasn’t translated for these accelerators outside of four to six distinct geographies in the US.

While there are many qualitative reasons to join an accelerator outside of funding assistance, funding is and will always remain a critical driver to company scale. As a result, founders are well-served to assess funding track records of accelerators when deciding which programs to apply to. Admittedly, this information may not always be public, but should be a component of founder diligence.

The views of the author of this article are provided as-is and do not necessarily represent the views of First Republic Bank.  


PicSamir Kaji is a managing director at First Republic Bank, where he leads a team managing venture capital and startup company relationships. He has spent over 15 years working within the venture capital industry. During this period, he has assisted and/or advised over 600 companies and 300 venture capital firms. Prior to joining First Republic, Samir spent thirteen years at Silicon Valley Bank, where he completed over 400 debt transactions, totaling over $4B in committed capital. Since 2008, Samir has led teams focused on providing services to venture capital firms and directly led engagements with several of the leading venture capital firms in the industry. Samir also has been an active angel investor in both venture capital funds and early-stage companies. Samir is a graduate of San Jose State University, where he earned his bachelor’s degree in finance, as well as Santa Clara’s Leavey School of Business, where he earned his M.B.A., with a concentration in finance.

  • Chaz

    Interesting article. I presently support an accelerator program as a mentor. I think that the real value to accelerators is not a stat on funds obtained after the program ends. I really think that the gains will be better business successes if and when institutional funding comes to that company. The rate of VC funded successes is not good for the amount of time and money spent – New Startups need to understand that starting a business is not a part-time job, it is not easy, there are no silver bullets, and the markets just do not behavior the way we think they should. Even having the best technology around does not directly translate to business success. We can all learn from success stories but markets shift – so what made a company successful in one decade will not necessary make another company successful in the another decade. We are seeing a decline of new companies in the US. Money is not going to change that trend.