Odds of Raising Venture Money and Selling for $100M+

Bob Dorf, co-author of Startup Owner’s Manual, has a post on Steve Blank’s blog titled Why Too Many Startups (er) Suck where he cites a stat that between .2% and 2% of all venture-backed startups ever sell for more than $100 million. Think about that for a minute: with 1,000 venture-backed startups, somewhere in the 2-20 range reach a nine-figure exit.

Let’s take the math further. Suppose, for simple analysis purposes, that only venture-backed companies sell for at least $100M+ (not true but it’s even more rare for a bootstrapped company to sell for $100M+ compared to a venture-backed company).What percentage of companies actually raise venture capital? According to a piece on Quora, .6% of companies raise venture capital.

Taking all companies that are created, all companies that raise at least one round of venture capital, and all companies that sell for $100M+, you get between .0012 and .00012. That is, one in 10,000 – 100,000 companies will raise venture capital and sell for $100M+.

The next time someone offers raising venture capital as a way to get a slice of a watermelon instead of owning a grape, ask them how many watermelons are grown each year.

What else? What are your thoughts on the odds of raising venture money and selling for $100M+?

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