Entrepreneurs, compute your odds of getting funded!

Light at the end of tunnel

A great read: Homebrew’s 1%: The VC Metrics Behind Investing in One of Every 100 Companies We Meet

This article gives a valuable under-the-hood look at typical investor’s “propensity to invest”. 3 key take-aways from this rare inside view are:

  1. 99 out of 100 opportunities evaluated are not funded!
  2. More than half of evaluated opportunities and 9 out of10 funded opportunities are ‘in-sourced’ – sourced from within the  close network of the investors.
  3. Less than half opportunities evaluated receive a chance to present their pitch in a meeting or a call and less than 2 out of 10 who get a chance to pitch get to the second meeting! So, if a founder of a new venture is meeting an investor for 2nd or 3rd time, she/he has already improved her/his chances of getting funded dramatically! Now, your chances to get an offer have improved from 1 out of 100 to 1 out of 7!

Of course, these are just the stats from one California-based investor. If you are in other less entrepreneurial-friendly parts of the world, the odds above would have to be discounted further. This article also does not state the typical time lag between identification of the opportunity and the ultimate offer. It is often long – sometimes more than a year! Time lag between the opportunity  identification and the offer is purposeful since it allows investors to observe if the venture is, in fact, making progress towards the end-goal.

Biggest source of funding for most startups is actually surprising | VentureBeat | Entrepreneur | by Meghan Kelly

So, it is clear that if you (and your close circle of family and friends) cannot help your venture in its early days, no one else will. The VentureBeat data does not surprise me at all. It is unfair for a total stranger take a leap of faith and write a check for you without (a) that “angel” has not had a chance to observe you and your time for some time and (b) does not see your own “skin in the game” (sorry for the cliche!).

Biggest source of funding for most startups is actually surprising | VentureBeat | Entrepreneur | by Meghan Kelly.