Comments on: Do Startup Seed Funding Programs Really Work?

By: Radu Ticiu

Radu Ticiu — Thu, 25 Mar 2010 10:09:18 +0000

Thanks, Anna. I am sure the Y-Combinator model will be soon addopted/addapted world-wide. The business development cycles should be much shorter than in our current model…

By: Anna Johnson

Anna Johnson — Thu, 25 Mar 2010 09:11:03 +0000

Radu – firstly, let me applaud you for doing what you can for startups in Romania. Here in Australia, the situation is pretty much the same: what incubation programs there are, are the government run incubation programs. These are great initiatives and better than nothing, but the reality is that they are out of reach for the vast majority of startups and, as in your country, we sorely need the kind of investor/entrepreneur supported acceleration programs pioneered by Y-Combinator.

By: Radu Ticiu

Radu Ticiu — Thu, 25 Mar 2010 08:49:39 +0000

Anna, I am managing an almost 6 years old incubation program, in Western Romania. Unfortunately our approach is the old European one, publicly founded and funded, rather comparable with a “social service” for start-ups: offering subsidized office space, training, advisory support, networking events, access to software development tools, over a 3 years period. No direct financial support available neither from the incubator nor business angels, seed funds, state programmes, etc.

In this context the incubated companies are splitting their existence in two components: 1. providing customized services to clients mostly abroad, assuring the revenue inflow and (eventually) 2. working on their own products and services.

Our statistics are extremely positive but only at two levels: most of the incubated companies are independently active (like +80%), the rest failed or are in “stealth mode”. There is one difference: non of them received investments, so they are linearly growing reaching 10-12-15 employees over 3-5 years but none has “exploded” based on successfully launching and exploiting a remarkable product/service.

So, the main metric to use for evaluating the success of different types of incubation approaches is the number of clients receiving investment or being acquired.

On other hand, the extreme advantage of ycombinator, techstars or newer European thedifferenceengine approach is the intensity and the rapidness of the business development support: 12-16 weeks of full time intervention, made possible by the initial capital investment that will keep beneficiaries minds protected from the stress of the next day’s bills, or next month’s customer acquisition.

As a conclusion, there is a great need in Europe of correct replication of the successful business accelerators programmes invented by Mr. Graham and friends…

By: Anna Johnson

Anna Johnson — Thu, 25 Mar 2010 08:16:03 +0000

I agree Radu – it would be great to have some solid data comparing the various types of programs. There might be bits and pieces of data here and there, but not necessarily comprehensive, definitive data, since most of these programs are private.

By: Anna Johnson

Anna Johnson — Thu, 25 Mar 2010 08:13:39 +0000

That’s a really good point, Jason. Y-Combinator, TechStars, etc are run by experienced entrepreneurs/angel investors/VCs who undoubtedly have a nose for winning businesses.