

Ask HN: What is the distribution of startup success? - jackfoxy

In the Platonic world there is a distribution of the success of startups that achieve $500K (or more) of seed funding. For instance maybe 1 in a thousand achieve 100:1 returns on the seed investment in 5 - 7 years, 1 in ten goes completely to zero, and the whole range in between. It is pretty close to impossible to actually gather the information required to derive this distribution, but I think a survey of folks knowledgeable in the start-up funding area would be a decent proxy. If you think you can contribute to this survey, what is your estimate of the distribution? Let's establish the following ground rules:<p>1) By <i>startup</i> we mean largely software-driven company of interest to the HN community. It can either go on to VC financing, or not.<p>2) Startup achieved $500K+ seed capital on or after 1/1/2002 (we want to eliminate the dot-com bust as much as possible).<p>3) Within 7 years there is either an actual valuation event, or good subjective evidence to support a valuation. (This rule leaves many younger companies in a nebulous state. Use your judgement.)<p>4) <i>Return</i> is return on the seed investment.<p>5) Estimate for distribution points of 100:1, 50:1, 10:1, 5:1, 2:1, 1:1, 0.5:1, 0.1:1, 0:1, summing to 1.<p>I realize this is not a substitute for due diligence, but simply a data point similar to total stock market return.
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jpau
I love the idea of surveying such data and would love to see the results. But
you're going to need a huge set of data because potentially interesting and
non-intuitive factors will be several 'layers' deep.

The data will show a very strong relationship between the space entered by
startups and funding; much of a startup's likely success - and thus VC
interest - depends on macro factors (e.g. industry growth, competition). These
things are known.

Perhaps to get a larger dataset than you're likely to receive here, scraping
public databases might be better? Can anyone please suggest such databases
(e.g. I don't know how much data you could get from Crunchbase?)?

