I was watching Michael Arrington interviewing Ron Conway and Paul Graham and this is what I learned and also my own view after several startups of my own and those of friends.
So Ron’s very simple data from 500+ startups on success and failure was:
- Ron Conway data shows a fail rate of 40% 2002-2010.
- Bubble years much worse – failure rate 77% (i.e. a total loss)
- Serial entrepreneurs better: 66% chance of success on repeat entrepreneur i.e. 20% edge on the second company i.e. vs 60% on current success rate.
- Regardless of economic climate, success probability is still the same i.e. any time is a good time to startup.
- Great defining companies are built at a faster rate than 10 years ago…now a couple of “mega” companies being built per year vs. one every 10 years.
- Younger entrepreneurs are more exciting, they will try anything and anything is possible.
- Trust gut and move faster – be decisive is also key to success.
* Success means still in business, a sale or not a total loss with no return at all.
OK so this data is from a small “gene pool” of companies that have managed to GET funded and doesn’t apply to all companies, also they will tend to be Silicon Valley companies and one’s where the founders have done a good job of working their network to get attention from Ron Conway…that’s a massive difference to the average startup – this is a very select group of companies already.
So from this select group who must have a big idea, a good basic team and have convinced their network to open doors in order to get funded in the first place…they have a current “success” rate of around 60% – what we don’t really know is what % actually got a good exit (yet) and therefore made money for themselves and Mr. Conway!
So what have we really learned from this then?
Only that if you are funded by someone as “networked” as Ron and can convince him then your odds are improved over the average…
So the learning for me is simple – pick your backers and investors very carefully and spend the time and effort to keep looking for funding until you get some “smart money” that will support and help develop you and your business. If you can’t get smart money then your risk goes up exponentially.
Additional comments from Paul Graham data from 400+ startup since 2005:
He didn’t get to say much but he saw some basic patterns for picking better startups:
- 4 person teams do badly, most likely security in numbers but this doesn’t work out after team formation. 2-3 optimal member teams.
- Men/women no difference. Couples good if they are stable.
- He has invested in 18-43 age range but no real difference based on age.
- Tough founders are best as they can weather the ups and downs vs. the others.
So my take from this is that you need a strong leader in a startup team and not a “committee” mindset. Anyone with the passion and drive can get started regardless of age, education or gender. If you have a team with a good mix of skills that has a good idea and that functions well then you are more likely to succeed (but that could be said of any team sport!).
In my opinion, Entrepreneurship is like “Chaos Theory” and that so many factors affect a good outcome that its hard to draw too much from these indicators other than what these big investors look out for when picking who to invest in – it’s not really a true indicator of success.
Not much to say about this one other than the details, if you want to learn about being an entrepreneur and you prefer Spanish this is the book for you!
Its published by: Panorama Editorial
Here’s the link to the book page:
Es una manera rápida y divertida de averiguar si puedes triunfar como empresario. Averigua cómo es realmente este estilo de vida y cuáles de tus rasgos de carácter podrían llevarte al éxito. Explora tus metas, talentos escondidos, pasiones, recursos y aptitudes de fondo reales. Las sencillas herramientas de auto-descubrimiento en el libro te facilitarán el análisis de esta información y dar los pasos siguientes hacia tus sueños empresariales con confianza total.
In this case, one of my Stanford teams from last year met up for a dinner and they sprung a surprise on me!
A small but thoughtful gift to say thanks for me helping them with their business plan and pitch to VCs.
As I said to them at the time, this was really fantastic as it’s not often you get any reward or praise for your help as a mentor…and when you do it feels really good!
They had gone to the effort of making this little mug that sits on my desk and that means a lot to me.
You will be surprised how little ideas like this can make people happy, remember you and want to help you…try it in your own life and work and see.
So thanks to my team, we had a blast and they were excellent to work with and got great grades in the Stanford course…what more can you ask for?
Today I did a Videocast with StartupSchool, it was a one hour session with on how to raise angel funding. We had a lively discussion about many of the core things Startups need to know about Angel Investors and how to raise the funds.
We covered a bunch of topics like those below:
- How to find & choose Angels Investors
- How to build relationships with Angel Investors
- How to pitch to Angel Investors
- How to value my equity
- Legal Options for Angel Investments
- What to expect from Angel investors
Check out the recording here:
Don’t forget to check out the many blog articles on this topic here:
This is also a useful resource i found recently:
I often get asked about how to raise Angel money and where to start. Well I have written a lot about this in the blog but personally I like learning from AV media more than blog posts so I tracked down this great session between my friends Tina and Mike (and Ron Conway).
This video session doesn’t get any better, this is the 101 you need and it’s only an hour of your time to watch the videos or listen to the podcast.
Now this is very “silicon valley” orientated but it will still work for you wherever you are, indeed this is the gold standard, it will be easier to raise funds in many places outside the valley.
Or listen in here: Listen to the entire talk
Mike only works a few deals per year and has a team of two, plus he will only work 2 at a time so you need good timing with him as well as being in his sweet spot. Ron does a lot more investing but you really need to be on his radar and also have some network effect to get to him (but a tip is he does a fair few seminars and events where you can get to him by simply walking up and exchanging a card and elevator pitch).
As for the Band of Angels (and other angel groups) we only see 3 deals a month and fund less then 1…so you really need to be on the top of your game to get funded.
This session will help you a great deal and is easy to absorb and understand as you see these guys on video than read a ton of books on the topic!