Never tell me the odds

3,720 to 1. Those are the odds of successfully navigating an asteroid field according to C-3PO in The Empire Strikes Back. But Han Solo isn’t interested and successfully pilots the Millennium Falcon through to safety. This episode brilliantly illustrates three essential qualities start-up founders need: a willingness to embrace risk, a maniacal determination to succeed and a confidence in their skill. There are others -the Global Entrepreneurial Index monitors 14 qualities- but these are the main ones.

What are the odds of successful entrepreneurship for new founders? This data is varied, but has a common theme: not good.

Here is a selection from different studies:

 ·      The odds of becoming a unicorn are between 1% (VC backed) and 0.023% (all tech start-ups launched in any given year).

·      11 out of every 12 start-ups fail.

·      97% consumer hardware start-ups fail.

·      92% of ‘slow-growing’ SaaS start-ups fail within the first three years. 

·      90-95% start-ups don’t meet projections; 70-80% don’t deliver any returns to investors and 30-40% liquidate.

·      75% VC backed businesses fail.

·      70% of tech companies fail, usually around 20 months after first raising financing.

·      68% tech start-ups fail.

·      45% UK firms founded in 2013 closed within 3 years, with London start-ups the most likely to fail.

·      553 start-ups failed in 2019, with total funding of $1.9B.

It is brutal. That’s why Marc Andreessen’s first advice to wannabe founders is ‘don’t do it’. Why would any sane person put themselves through the pain and suffering?

And yet 274,000 firms open every day globally. Many of them will fail, but some will succeed. And a small number will become the unicorns of the future.

Success is hard but not impossible. Don’t be put off being a founder, but know the odds. They are better than successfully navigating an asteroid field. The four TIE fighters that followed Han Solo into the asteroid field didn’t make it. But he survived and became a screen icon.

Over the years ahead, we will be doing all we can to help founders navigate their own paths to victory, so they can be the Han Solos of the future. And who wouldn’t want that?

UP AND TO THE RIGHT.

Sources: Failory; CB Insights; McKinsey; HBS; WSJ: FT.com; Crunchbase

You can find the latest Global Entrepreneurial Index here:

https://thegedi.org/wp-content/uploads/2020/01/GEI_2019_Final-1.pdf