Western: Only 0.02% of VC-backed startups become unicorns
Alex Western · Is Growth Bad for Startups? · Jan 29, 2019 · at 13:55
This episode carries Alex Western's own address, with nobody on the show putting questions to them. It still counts as said, and it is kept out of every score on their page.
Alex Western, Managing Director at Think3, presents data on startup success rates while speaking at SaaStr.
0:00 / 0:25exact quote · 25.2s
▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark
“There was some now famous research done by Cowboy Ventures into outstanding VC-backed startups, and they found that 0.02% of VC-backed startups become unicorns, and our own research suggests that only about 10% are ever on escape velocity trajectory or above the Mendoza line, so to speak, even if only for a brief time”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Alex Western
Western: Founders amass more wealth through frequent, smaller startup exits
“We think that most founders can actually use the overfocus on growth to their advantage, like a judo artist, either by more often choosing the lifestyle option, or by having a more sober approach to their relationship with their companies and with VCs, by actu…”
Western: VCs are incentivized to force startups into unicorn outcomes
“So, if you're a VC, you have the incentive, no matter where you think the company might initially fall on this rank, force ranking of multiples of invested capital, you have an incentive to try to force every company to be a unicorn, to try to shoot for the st…”
Western: Raising VC funding removes attractive mid-tier startup exits
“Each time you raise VC funding, each time you bring more investors into your cap table, each time you have to introduce greater and greater growth projections in order to justify that valuation and get to the next step, you take more and more options off the t…”
Western: VC-founder incentive misalignment forces hypergrowth and ruins startups
“We at Think Three think that there is an incentives misalignment, fundamentally, between most VCs and founders, and that that incentives misalignment is pushing companies to grow too much too fast, and it's ruining great companies like PowerDrive.”
Western: VCs push portfolio companies harder during market downturns
“Because ironically, if and as things start to turn sour, VCs actually have to push harder to make up the losses.”
Western: Most B2B startups should prioritize customer retention over growth
“Most companies aren't necessarily in situations where they can grow that quickly, so we find they're usually better off actually focusing on retention, not on growth, but they can't make that trade-off because they feel a lot of pressure from their venture cap…”