👋 Hi, I’m Andre and welcome to my newsletter Data-Driven VC which is all about becoming a better investor with Data & AI. Join 34,015 thought leaders from VCs like a16z, Accel, Index, Sequoia, and more to understand how startup investing becomes more data-driven, why it matters, and what it means for you.

Brought to you by VESTBERRY - The Future of Portfolio Management

Fresh from our Venture Intelligence Day conference in NYC: David Teten, veteran VC, shares a practical framework for driving portfolio company growth called TOPSCAN: Team, Ops, Perspective, Skill, Customer, Analysis, Network.

Watch the video to learn what real levers VCs can pull to help their companies succeed.

Startup incubators and accelerators have become a fixture of the tech ecosystem over the past decade, promising to boost fledgling companies’ odds in a world where most startups fail (indeed, roughly 70% of new ventures don’t survive their first ten years (Howarth, 2024)).

Programs like Y Combinator, Techstars, and others in the U.S. and Europe have now been around long enough to analyze their long-term return on investment (ROI) and performance.

Do incubated startups actually survive longer, raise more funding, or achieve more exits than others? How do the top programs stack up against each other, and what do founders say about their value?

This episode examines the data from the last ten years, focusing on tech startups (primarily SaaS and related sectors) graduating from incubators.

We’ll explore survival and graduation rates to Series A, exit outcomes (IPOs, M&As, etc.), the financial performance of the incubators’ portfolios, comparisons among top programs (like Y Combinator vs. Techstars), founder sentiment, and even the downsides and underperformance patterns that emerge from the accelerator model.

The results show a story of improved odds and outsized successes, but concentrated in a “long tail” of big winners that drive most of the returns.

Let’s jump in👇

One of the clearest measures of an incubator’s impact is how many of its startups survive the tumultuous early years. Top accelerators appear to dramatically improve the above-mentioned 30% survival baseline. For example, data from Y Combinator (YC) shows that over 50% of YC companies are still alive a decade after graduation – nearly double the typical survival rate.

In fact, as of late 2024, only about 13% of YC’s portfolio had shut down entirely, with the rest either still operating or having exited (Broe, 2025). Other programs also beat the odds: one analysis found the estimated survival rate of YC-backed startups to be ~93%, compared to around 80% for Techstars and ~81% for 500 Startups (ByteBridge, 2025). While methodologies differ, it’s clear that top tier accelerator graduates fail at a lower rate than the norm.

Another important metric is the “graduation” to Series A and beyond. In other words, do incubator startups successfully secure substantial venture funding after the program? Here again, the top accelerators show strong results. Roughly 45% of Y Combinator companies go on to raise a Series A round (compared to ~33% of seed-stage startups overall) (Broe, 2025). This indicates nearly half of YC startups advance to that next level of funding and growth. Techstars reports a similar advantage in early fundraising: 74% of Techstars companies raise follow-on capital within three years of the program (Techstars, 2023).

In other words, about three-quarters of Techstars graduates find additional investors, often an essential step toward scaling. These follow-on funding rates suggest that the accelerator stamp of approval and demo day exposure give startups a substantial fundraising edge. As YC itself touts, being an alum can open doors to top-tier VCs that might otherwise be out of reach (Broe, 2025). It’s worth noting that accelerators also select for teams that already have high potential, so some of this outperformance is due to selection bias.

Nonetheless, the combination of selection + program value-add seems to meaningfully improve both survival odds and chances of raising Series A for startups in these programs.

Ultimately, the success of an incubator-backed startup (from an investor’s perspective) is typically realized through a liquidity event such as an acquisition, IPO, or major secondary stock sale. How often do accelerator startups actually reach a lucrative exit?

The data shows a sizeable minority do, though the exact rates depend on the time frame and definition. Y Combinator’s track record is impressive: about 10% of YC companies have achieved an exit (either being acquired or going public) so far (Broe, 2025). Within YC’s portfolio of nearly 5,000 companies, 17 have gone all the way to IPO as of late 2024, including household names like Airbnb, Coinbase, DoorDash, and Reddit. Many more have been acquired in private M&A deals.

In fact, as YC’s batches age, the cumulative exit rate climbs substantially: For the cohorts that are 10+ years old, between 25% and 50% of the companies have been acquired within a decade of graduating (Broe, 2025). By comparison, only ~15% of venture-funded startups globally get acquired within 10 years of their first funding (Broe, 2025), highlighting that YC companies outperform on this metric.

Techstars also boasts a healthy exit pipeline. According to a PitchBook survey (2023), 31% of Techstars companies exit within eight years of the program, which is a higher eight-year exit rate than any other accelerator globally in that survey. Techstars has produced IPOs such as SendGrid (later acquired by Twilio) and DigitalOcean, and successful acquisitions like PillPack (acquired by Amazon) and Remitly (which later IPO’d), among others.

500 Startups/500 Global has seen at least 282 portfolio exits as of 2021 (Statista, 2023), including notable wins like Credit Karma’s $7B acquisition. For context, those numbers are in the same ballpark as Techstars (303 exits by 2021) and a bit behind Y Combinator (351 exits by 2021) – not surprising given YC started a few years earlier and scaled larger batches.

It is important to note that most exits from incubator startups are via acquisition, not IPO. The IPO league is relatively small (YC’s 17 IPOs, Techstars’ 14 (Traxn, 2025), etc.), whereas dozens or even hundreds of alumni have been bought by larger companies over the years. These acquisitions range from big-ticket buyouts to modest acqui-hires.

Another form of liquidity that occurs, though harder to track, is secondary sales, where founders or early investors sell some stock during later funding rounds, allowing partial cash-out before an official “exit.” While data on secondary transactions isn’t readily disclosed, it has become more common for top startups (founders from hot accelerator companies sometimes take money off the table in growth rounds).

A key pattern in startup exits is the power-law distribution of outcomes, and accelerators are no exception. A few blockbuster successes account for the vast majority of value creation, constituting the essence of the “long tail” ROI. Y Combinator’s portfolio illustrates this vividly: Just four companies (Airbnb, DoorDash, Coinbase, and Instacart) make up over 84% of the total market value generated by all YC startups to date (Broe, 2025).

In other words, a tiny fraction of companies produce most of the returns. Techstars’ outcomes are similarly skewed: While it has over 3,700 alumni, the wealth creation is concentrated in its 16 unicorns and other top performers (Traxn, 2025).