What Happens Every Year:
- New Startups per year: 5,580,000
- Number of new venture capital deals for year 2008: 3,808
- Number of Home-runs (ROI over 100%) Per Year: 76
This is U.S. venture capital data only. I can’t say what the model looks like in other countries.
What are your thoughts?
Sources:
- Kauffman Foundation Index: According to the Kauffman index, on average, 465,000 start-ups are launched per month. Extend that annually (465,000)*(12) = 5,580,000
- PwC Moneytree Report 2008: 3,808 deals done within venture capital 2008
- Illusions of Entrepreneurship: This was the source of the home-runs, as well as failure rate. I highly recommend taking the quiz, too!
{ 9 comments… read them below or add one }
The venture capital industry is not going to go away. The venture capitalists will adapt to the new economy and entrepreneurs seeking funding will adapt to new funding requirements. There will always be people with money wanting to invest outside of the stock market and start-ups that require capital. I think it will be a little bit before the new rules of the new economy wil be determined.
Heh, I agree — I hope it doesn’t go away, at least! I’m profoundly interested in the next evolution/look of venture capital
I’d like to see the figures when focusing on high-tech (ICT, Web, mobile…) startups only.
sorry, i dont quite get it.
how do you measure the success of a new vc deal 2008 (3,808) in March 2009? or in other words: what do the home runs (76) actually tell you at this stage?
i am actually surprised investors already got an roi over 100 percent in 76 cases by now.
Uh, so this data assumes that *every* “successful” startup has taken VC? I think if you look at US Dept. of Commerce data they would highly refute that; majority of US small businesses do *not* take VC and are still alive.
Perhaps you’re defining the “5,580,000 startups” as “5,580,000 startups who pitched VC”?
Uh, so this data assumes that *every* “successful” startup has taken VC? I think if you look at US Dept. of Commerce data they would highly refute that; majority of US small businesses do *not* take VC and are still alive.
Perhaps you’re defining the “5,580,000 startups” as “5,580,000 startups who pitched VC”?
Uh, so this data assumes that *every* “successful” startup has taken VC? I think if you look at US Dept. of Commerce data they would highly refute that; majority of US small businesses do *not* take VC and are still alive.
Perhaps you’re defining the “5,580,000 startups” as “5,580,000 startups who pitched VC”?
I’m not sure where the Kaufman Foundation got its data but that sounds highly inflated. If you look at the United States’ Small Business Administration FAQ (http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24), they indicate there were only 631,700 new firms created in 2007, not anywhere near 5,580,000. Also, there are apparently somewhere in the vicinity of 27.2M businesses in total in the US and that includes businesses with only 1 person (no employees).
If this data is correct, that great shifts your numbers above.
Valid inquiries. I was blown away by the figure, too; however, when I look around at the entrepreneurs around me, many of them are starting companies without registering with the US Dept. of Commerce. Many feel that it’s wise for individuals to first generate cash flow before they declare themselves a corporation (and have to bear the cost associated with that). For instance, even an attorney I know recently left his huge, prestigious firm. He’s operating right now, and hasn’t incorporated–he’s not set on a name (just doing a sole-proprietorship). Another guy I know has been making money through his web startup for over 2 years. Still doesn’t have a corporation; he just uses his paypal account lol.
My feeling is that Kauffman surveyed and used these types of entrepreneurs as a representative figure, as well.