Data Catalyst - InnovationWe got a lot of reaction to our blog post announcing our accelerator research project. One of the folks who connected with us was Sarah Takaki, a Canadian enrolled in the MBA program at the Cambridge Judge Business School, University of Cambridge, in the UK. Sarah, along with fellow students Michael, Clare, Charlie and Craig, were engaged in a research project with a similar objective to ours: trying to better understand accelerators and the value they offer to entrepreneurs. Following a Skype call, we thought it would be wonderful to feature their research in the following guest post. -HK

The number of accelerators has increased dramatically over the past five years, rocketing from one in 2005 to 154 in 2013 according to Seed-DB. Most accelerator programs will ask for equity in your startup and may even require you and your team to pack up and move to a new city. So what’s in it for you? What value can accelerators actually add? We, a team of MBA students at Cambridge Judge Business School, decided to find out.

In partnership with Playfair Capital, a London-based seed fund, we researched a variety of accelerator programs, interviewing 14 program managers from across Europe and the Middle East. Overall, most accelerator programs employ a similar approach, running three-month programs that offer mentor support and seed funding for an equity stake, and build up to a demo day during which the startups pitch to investors.

Programs differed though in their funding models and primary objectives. Accelerators that were fully or partially government funded tended to identify local economic development as their key success metric, whereas privately funded accelerators were more focused on the return on investment resulting from successful exits of their startups. In addition, accelerators located in areas where the startup community is relatively small and underdeveloped often cited startup ecosystem development as their main goal. Despite some differences, most accelerators agreed that the ratio of startups that receive follow-on funding after graduating from the program was an important measure of success. Accelerators wanted to track the return on their seed investment as well, but many programs were too young to have a sufficient number of graduates that had made successful exits through IPOs or acquisitions.

Given the lack of returns data, we settled on a proxy to measure accelerator success: the survivorship of startups participating in these programs. Since accelerators have been active in the United States longer than in Canada or Europe, we used data from the US Bureau of Labor Statistics to provide two benchmarks of startup survivorship: US survival rates and California survival rates. We compared these with the survival rates of Silicon Valley firms and two of the most widely referenced accelerators, TechStars and Y Combinator.

Data Catalyst - Average Survival Rate of Startups in Accelerators

What does this mean? Well, startups that go through accelerators tend to last longer than those that don’t. We found that startups from TechStars and Y Combinator had a higher rate of survival by year five, up to 15% higher than the general startup population in the United States. So there does seem to be something in the top US accelerators’ secret sauce that adds staying power to their startups.

So are accelerators worth the hype? We really need longer-term data to get the full picture of what value accelerators bring to startups, but looking back on what the top tier accelerators have done so far, it looks like they help their startups perform better and last longer. Given the newness of the accelerators, there is limited long-term data on the success of accelerators and further studies are needed. Stay tuned for more of the MaRS Data Catalyst work which will explore exactly that!


Before joining the Cambridge MBA class of 2012–2013, Sarah Takaki worked as an operational consultant at BMO Financial Group based in Toronto. She has a background in engineering and the non-profit sector and is passionate about leveraging the power of business to achieve social change.

Charlie Somerset has been an investment manager at late-stage venture capital fund Loudwater Partners for over five years, investing in growth-stage companies in the UK and US. He is a non-executive director of two portfolio companies—a retail fund management business and a media production company—and is a CFA charterholder.

Craig Lee has over five years of combined pharmaceuticals and finance experience and holds a PhD in pharmacology. Before joining the MBA program, he worked as an equity analyst responsible for the valuation of pharmaceutical, biotechnology and healthcare companies.

As a manager at PayPal, Clare Jones evaluated investment and acquisition opportunities in the financial technology industry both domestically and internationally. Her prior experience included work on Visa’s corporate development team and Rothschild’s restructuring team.

Michael Birdsall grew up in an entrepreneurial family and, after serving in the United States Navy as a nuclear reactor operator, carried on his family’s tradition by starting his own businesses. Michael is currently reading for an MBA at Cambridge University’s Judge Business School.

Helen Kula

Helen Kula is the former Manager of Data Product at MaRS Data Catalyst. While with Data Catalyst, she worked on acquiring, evaluating and linking data to build products that generate insight into Ontario’s startups and the province’s innovation economy. See more…