Introducing the Two Main Data Categories of Startup Assistance Organizations.
Despite the largely public sources of funding that business incubators and accelerators receive, very few of them publicly release data on their outcomes. This is often noted as being due to factors like the workload and time-consuming nature of data collection. However, notions that they don’t collect data at all is a misconception.
Studies and think tank reports, like the DEEP Centre’s “Accelerating Canada’s Startup Ecosystem," have concluded that these organizations are making endeavours to analyze their initiatives in-house and that this data can be broadly lumped into two categories: activity-based and economic impact metrics. Both categories provide incubators and accelerators with significant insight into the strengths and weaknesses of their programs and how they benefit early-stage businesses.
Activity-based metrics track outputs and include activities such as the number of events hosted and companies supported. In addition to tracking these activities, many organizations also survey their members and participants to assess the quality of services offered, like events and programming.
Economic Impact Metrics
Most organizations complement their activity tracking efforts, by collecting the economic outcomes associated with those activities. Deep Centre’s report argued that “only by tracking activities and outcomes can incubators and accelerators obtain a more granular understanding of which of their programs are driving economic performance.”
Currently, data gurus at incubators and accelerators are focusing on tracking the following areas to measure economic impact:
Survival Rates. Survival rates include how many graduates are still operating, how many have failed and how many have been acquired.
Company Valuation. For venture capital-backed organizations, company valuation is the preferred measure of success. The assumption is that the valuation of the company is the best way to capture the value that has been created.
Job Creation. Job creation is another standard metric collected and one that public investors are naturally keen to promote.
Revenue. Revenue, either recorded annually or as monthly recurring, is arguably the most conclusive outcome-oriented measure of growth.
Across these categories, the collection of reliable data is key to understand the impact of both individual organizations, as well as the health of their broader ecosystem.
What Else Can Be Done
Data on the effectiveness and outcomes associated with these types of organizations is a cloudy field. With little standardization across these organizations regarding what metrics to collect and publish, the ability to build meaningful analysis is challenging.
For firms that have only started to dip their toes into data collection, focusing their measurement efforts on gathering metrics like the ones listed above is a solid starting point.
Another tactic that should be considered is the introduction of data reporting contracts. Adding data sharing requirements is a practice that can improve one’s ability to collect key metrics, and simplify the data collection process all-together.
What It All Means
Consistent performance updates of the data collected will keep these organizations well informed, while also forcing them to reevaluate, defend, and question current programs and processes. It will also allow the leaders of these organizations to best adapt to the changing ground underneath them.