Lots of debate between finance vs tech here. Proponents of tech argue that start-up scene is great ...
Assuming you have a kid that graduates from HYP 4.0 STEM w/e, social, connected etc. and they go on to start a start-up, what's the likelihood that it will go on to reach some semblance of success? I suppose this is really to strike a comparison to an average joe who starts a start-up
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Depends if they try to solve an identified problem, or if they want to solve a problem. Do not underestimate how much of a role luck plays in everything. You should pursue startups if you reasonably think you’d be the person that’d thrive in the environment and you’re doing it for the right reasons. No made up % on here should change your view of how you want to pursue your career
For someone straight out of school, the odds aren’t great. The unicorns are rare even given then incredibly bullish valuations. Without experience managing or in the field that they are targeting a new graduate has an uphill battle. The group that seems most successful are those with prior general management experience, launching in a space they know. When I was in college I worked at a MM boutique as a SA, what surprised me is here were successful MM companies and the founders were all towards late middle age, having launched the company in their mid thirties to forties.
From idea / MVP to pre-seed, very low odds.. look at the acceptance rate of top accelerators. Most pre-seed investors pass on most of the incoming names.
From pre-seed to seed, odds are still pretty rough. This is the first institutional round and frankly some companies that were funded at pre-seed by tiny funds / angels would get passed on by a lot of institutional VC investors.
From seed to series A, you need to show proof of traction, proof that product/market fit is achievable and a hiring plan that will lead the company to its eventual growth phase. Vast majority of seed startups don’t raise a series A.
Post series A, unless some black swan event happens the company will likely be able to continue to raise as almost all of the risk has been priced at this point. There will likely be an exit (be it acquisition or eventual IPO after some more rounds of funding + growth). At this point, you’re hopefully in the phase of fueling growth on all fronts.
The typical founder makes $0 (i.e. no exit or meaningless exit). The distribution of the ones who make decent exits (~30%) is something like:
between $1-200m (99%)
over $200m (1%)
Overall:
~70% - $0 or a few $100k
~20% - $1-10m
~10% - $10-50m
~2.5% - $50-100m
~1% - $100-200m
~0.025% - $200-500m
~0.003% - $500-1bn
~0.00009% - >$1bn
Wow, thanks a lot for the in-depth stats. Running the numbers (assuming $150k for $0-a few $100k, mid-points for the ranges given and $5bn for the >$1bn category) gives an EV of ~$7.7m. Also, interesting to note that the tail outcomes (over $200m) only add ~$0.1m to the EV. Grinding it out in a high-paying corporate role doesn't seem so bad after all.
Where are you getting these very specific numbers lmfao
Crunchbase
"Assuming you have a kid that graduates from HYP 4.0 STEM w/e, social, connected etc. and they go on to start a start-up, what's the likelihood that it will go on to reach some semblance of success? I suppose this is really to strike a comparison to an average joe who starts a start-up"
This is so naive to say it's unbelievable.
Richest startup owner I know went to a no name school (a party school in fact) and eventually started it in their early 30s. Now worth $100-200 million (company does 9 figure revenue, solid middle market company that's mostly privately owned by founders).
Know a Wharton grad whose been struggling for almost a year now to get his startup any funding. Someone with IB/ senior PE experience.
I saw a twitter post recently, regarding something similar.
"Stanford GSB alums have started 687 venture backed businesses since 2010 97 of those companies (14%) are valued at $100M or more 26 (4%) are valued at $1Bn+ Investing in the seed round of each business would have netted you a ~16x return to date"
Granted Silicon Valley throws around retarded sums of money for people. Probably no other MBA can raise as much capital just because of the school they went to from alumni.
There’s a bit of selection bias though. They’ve been funded by a VC which implies some level of acceptance. A quick search says the average seed round is at a pre money valuation of $10mm and series A is $22mm.
In this post Brrrrrrr world, all start-ups succeed.
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