Fact or Fiction in Startup Land

It is easy to get a distorted view of what startup success looks like. After all, we hear so much about the tiny few that capture media attention, such as Facebook, YouTube, etc. Not surprisingly, this sample skews towards consumer-facing, mass market companies that are bought out or invested in for megabucks.

The reality is very different. Some industries just aren’t newsworthy, even if they are lucrative. Not all opportunities are consumer-facing:  business-to-business is, well, big business. Many startups remain privately held and below the radar. And most don’t end up being worth billions, even if they are very successful.

The latest BRW Fast Starters edition ("the 100 fastest growing start-up companies") gives a more representative sample of "successful" startup profiles than we typically see. A few of the interesting factoids that jumped out include:

  •  57% became profitable in the first year
  • only 29% started the business with a planned exit strategy
  • 67% say their long term goal is to retain ownership, with only 13% aspiring to list on the stock exchange
  • About half spent 1 to 6 months planning the business before starting, and a further 20% took 6 to 12 months
  • Average age of the company founders was 38 years old
  • 78% used their own savings to start the business, rather than taking money from banks or outside investors

No doubt the BRW statistics have their own biases, but they are still a useful antidote to the urban legend of "20 year old founder scribbles business plan on beer coaster, raises millions in venture capital, and is now worth billions". Nothing wrong with aiming high, but you need to keep things real as well.

Perhaps Jim Collins of Good to Great fame put it best when he advised: "Confront the brutal facts yet never lose faith"


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