How SOSV’s deep tech, multi-stage approach sets us apart: A response to PitchBook’s accelerator report
Ned Desmond
Ned Desmond

Pitchbook’s analyst team recently published a report entitled “Quantifying the success of YC and the largest accelerators.” SOSV was one of the five firms mentioned in the analysis, along with Y Combinator, TechStars, Global 500, and MassChallenge. The report looks at performance indices such as aggregate valuations, capital raised, and unicorns produced, among others. 

We are honored to be counted among such accomplished firms. At the same time, we are the youngest, smallest and most specialized, and we’re not really an accelerator. As a result, our fit in Pitchbook’s analysis can get a bit awkward, which has raised some questions. We try to address those below.

SOSV calls itself a multi-stage venture firm and Pitchbook actually lists SOSV as a venture firm, not an accelerator. Why were you included in the study? 

SOSV invests starting at pre-seed into companies that join its startup development programs (HAX, IndieBio, Orbit). As far as that goes, SOSV looks like an accelerator. 

What makes SOSV not an accelerator comes down to two factors. First, SOSV programs provide our deep tech founders with sophisticated biotech labs and hard tech fabrication facilities staffed with engineers, scientists and designers. Second, we’re a multi-stage investor; in fact, SOSV deploys the majority of its capital in later stage rounds. Founders love SOSV because we invest for years and years and bring in growth investors.

In what other ways do you differ from the firms in the study? 

SOSV invests about 88% of its capital in deep tech—mostly climate and health oriented companies—whereas the others invest in more mainstream categories, such as SaaS, enterprise, and consumer. Deep tech startups require considerably more time and investment to reach maturity than any other category. That said, even Pitchbook’s data shows that in the past five years, SOSV’s cohorts’ funding rates were competitive with, and even exceeded (2021), the the others in the same time frame. 

SOSV is also much younger than the other firms. YC (2005), Techstars (2006), Mass Challenge (2009) and 500 Global (2010) were well underway before SOSV launched its first accelerator program in 2010 and began to hit stride in 2012 (HAX) and 2014 (IndieBio). Given that much of Pitchbook’s analysis is based on cumulative number of startups backed in the 2010s, when SOSV’s portfolio had one-half to one-third as many companies as the others, SOSV is at a comparative disadvantage. 

The Pitchbook report noted repeatedly that its data for SOSV and some of the other firms was incomplete. How did that alter SOSV’s profile in the study?

Most VCs, including SOSV, regularly provide Pitchbook with basic data about their investments—the companies, the date, the stage—but as a rule they do not provide valuation data or the amounts actually raised. That’s because founders often prefer to keep that information confidential. Pitchbook, for its part, tries to collect capital raised and valuation data from legal filings, press releases, and news stories, but it’s usually incomplete. 

That helps explain the variance in the report between our own data and what Pitchbook reported. If Pitchbook had all the data, here is how some key SOSV results would have looked: 

  • Unicorns: SOSV has 4 unicorns (not 1) from the 2010-2015 onboard years (Perfect Day, Bitmex, Opentrons, and Upside Foods). 
  • Companies valued $0.1B-0.5B: SOSV has 12 companies (not 8) in the 2010-2015 onboard years (MakeBlock, Particle, PIXMoving, Yeelight, Avidbots, Bartesian, KEYI, Endless West, Geltor, Koniku, SnapAsk, USHOPAL). 
  • Cumulative capital raised: SOSV program graduates 2010-2022 have raised over $6.3 billion (not $4.7 billion).  
  • Cumulative valuations: The average at 5 years post-program for SOSV companies onboarded 2013-2016 is $1.4 billion (not $800 million). 
  • Ratio of total valuation to invested capital: SOSV’s correct median cumulative valuation to cumulative capital ratio at five years post-graduation is 361.2% (vs. 243.7%) and eight-year median at 495.8% (vs.292.0%).

In some cases, the corrected numbers would have significantly advanced SOSV’s performance versus the other firms, though there’s not much point in that analysis given that the data for the portfolios at TechStars, Global 500 and MassChallenger is—like SOSV’s— incomplete, according to Pitchbook.

All that said, we applaud Pitchbook’s ambition to take on such a challenging project, and we are proud that SOSV was one of the five firms selected. It’s a credit to our general partners and their teams, all of whom work every day in our extensive facilities side-by-side with deep tech founders to build revolutionary products and raise fresh capital.

We remain relentlessly focused on performance in our key, deep tech categories, notably climate tech, where SOSV is not only the most active VC investor (according to Pitchbook) but has also shown powerful returns, with a 49.5% gross IRR across 227+ climate tech companies in SOSV’s Funds III and IV (2015-2022). For SOSV, that’s the performance that will secure our legacy and fulfill our mission to advance “human and planetary health.” 

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