Base Rate of High-Tech Start-up Success

I was going through some notes the other day from business school, and came across a presentation that referred to success rates for high-tech companies. The numbers come from the book “High Tech Start Up: The Complete Handbook For Creating Successful New High Tech Companies” by John Nesheim, which is relatively old, but still poignant. In it he offers some numbers that quantify the odds of success for high-tech start-ups – here are the numbers.

The sobering stats

  • The average VC funds 6 out of every 1,000 business plans received each year
  • Around 60% of funded high-tech start-ups go bankrupt
  • Around 30% get acquired by other companies or just never hit it big
  • Less than 10% go public
  • Of every 1 million ideas for a high-tech company, six lead to successful public companies

What does this all mean?

Well firstly, we could debate the numbers a bit seeing how things have changed over the years since 2000, but that’s not really the point here. What is the point is that there is a base rate of success for your start-up. While the numbers are pretty grim, it’s better to know what you’re up against…and also know that start-ups are a journey in increasing your odds over time, rather than knocking it out of the park day one. More importantly, you don’t have to build a public company to be considered “successful”. We’ll discuss that in more detail later.

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