The word “startup” has recently catch the international attention after the sensational success some companies have had in just a few years.
Companies such as Amazon, Google and Facebook, in around ten years, have passed from being a garage or college startups to giants controlling the entire world.
Sure, company like Facebook got huge investment that allowed them to reach a global audience in a really short period of time. In fact the company raised over $12.7 million in less than a year with just 150,000 users! But the investors, when it came to decide to invest in the company, looked at two things:
- The huge amount of time people were spending on the social: more than half of the users came back to site every single day. Not extraordinary today but impressive for 2005 when a social network was still something unknown.
- The impressive growth rate: from February 4, 2004 to the end of the same month almost three-quarters of Harvard’s undergraduates started using it.
So the investors bet in just one word: potential
But, to stick to the topic, a startup is just a new company and, after the dot-com era, particularly related to the tech and internet industry.
“A startup company or startup is a company, a partnership or temporary organization designed to search for a repeatable and scalable business model. ”
These companies, generally newly created, are in a phase of development and research for markets. The term became popular internationally during the dot-com bubble when a great number of dot-com companies were founded.” (Wikipedia)
In the book “The Lean Startup“, very useful guide to help entrepreneurs increase their odds of building a successful startup, Eric Ries describes a startup as: ” a human institution designed to create a new product or service under conditions of extreme uncertainty“. Tweet
This “extreme uncertainty” sounds like a conviction for most of the startups. In fact Companies typically die around ~20 months after their last financing round and after having raised $1.3 million ( Source CB Insights) and “Companies in the social industry saw the highest of number of startup failures”.
Looking at the stats above it’s easy to understand that the road to success for a startup it’s an hard thing and, often, not just drive by data and numbers.
An average 79% of internet startups died in 2013 Tweet
So, what are the world’s most valuable startups and how they survived to the average 2 years trial period?
The first, and most valuable startup is Uber. The “private driver” company recently raised $1,2 billion funds from a group of mutual fund managers. Last year Google Ventures invested $258 million in Uber and today the company is evaluated $18.2 billion.
Also AirBnB has recently closed its $500M round of funding that brings the company to a $10 Billion valuation.
Dropbox, the cloud based file sharing company, gained, the last February, $350 million in funding.
Interesting fact is that the first three places are taken from American’s startup. Just Xiaomi, Chinese mobile tech company, has raised the same amount as Dropbox did.
So, if you want your startup to live more than 2 years, you’d better try to involve in your business big bucks investors, as the companies above did, or you just have one way to survive: make money ASAP