I find it hard to believe 9 out of every 10 startups fail.
That stat is either a relic of a bygone era, or it includes every LLC somebody spins up on a whim and shuts down.
Here’s some non-exhaustive data on why failure rates are likely lower:
That stat is either a relic of a bygone era, or it includes every LLC somebody spins up on a whim and shuts down.
Here’s some non-exhaustive data on why failure rates are likely lower:
None of these are a smoking gun on their own. I think they mostly point to an overall ecosystem that's less risky than we're led to believe.
First, here's the 🐐 himself on venture returns:
"50% of the companies make money, 50% of the companies lose money."
(he's admittedly highlighting the returns for top firms)
"50% of the companies make money, 50% of the companies lose money."
(he's admittedly highlighting the returns for top firms)
Secondly, startup *exit* values grew ~170% last year, outpacing the growth rate of new capital.
In other words, there are far more landing parties than ever.
(Souce: @PitchBook and @nvca, h/t @packym)
In other words, there are far more landing parties than ever.
(Souce: @PitchBook and @nvca, h/t @packym)
Third, there was also, predictably, a huge influx of net new venture dollars & deals last year.
There are all sorts of implications with so much new money:
- Startups have more lifelines
- Later-stage startups can fund new acquisitions
- Startups can pay people more
I think the last one is huge when it comes to de-risking the ecosystem...
- Startups have more lifelines
- Later-stage startups can fund new acquisitions
- Startups can pay people more
I think the last one is huge when it comes to de-risking the ecosystem...
Many startups can now pay close-to-market rates, pulling in more capable people & de-risking the ecosystem.
https://twitter.com/GergelyOrosz/status/1479865906729730052
Related: a friend at a top growth fund told me that a few years ago, maybe 5% of deals included a secondary sale as part of the raise. Today, it’s around 50%.
Even if secondary sales don’t guarantee a company's eventual destiny, they're a tool for keeping talent in the ecosystem.
The days of having to get the more boring, better-paid job out of practical necessity are dying.
The days of having to get the more boring, better-paid job out of practical necessity are dying.
Finally, personal experience...
As a founder: one company exited, another had inbound demand for secondaries, the third is too early to tell.
In my angel portfolio, 15%+ of companies have had a liquidity event that returned at 2x+ capital. Many more have had substantial markups
As a founder: one company exited, another had inbound demand for secondaries, the third is too early to tell.
In my angel portfolio, 15%+ of companies have had a liquidity event that returned at 2x+ capital. Many more have had substantial markups
/ Fin.
Of course, most startups fail. But I find it hard to believe that if a reasonably-competent founder started ten companies in a lifetime, only one of them would have any sort of exit event.
But what say ye, Twitter?
Of course, most startups fail. But I find it hard to believe that if a reasonably-competent founder started ten companies in a lifetime, only one of them would have any sort of exit event.
But what say ye, Twitter?
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