One area I spend a good bit of time thinking about is how to get more tech startups to a modestly sustainable level of success (e.g. $250k in run rate) as well as to a more sustainable level of success (e.g. $1 million in gross margin). As a community, we need more entrepreneurs taking more at-bats to get more hits, and more homeruns. Let’s assume we have a community goal of one new sustainably successful tech startup ($1 million in gross margin) per month (12 per year), how many companies need to be started? Here’s a guess:
- 100 tech startups start
- 10 achieve $250,000 in revenue within three years
- 2 achieve $1 million in gross margin within five years
According to this survey, only 4% of all business have $1 million or more in revenue, so it feels directionally correct that getting a tech startup to $1 million in gross margin (thus higher than $1 million in revenue) would be an even smaller percentage. To get 12 new sustainably successful tech startups per year, we need local entrepreneurs to start 600 new tech startups per year. My guess is that we’re halfway there in Atlanta and need to work harder to grow our ecosystem.
What else? What are your thoughts on quantifying the number of startups to achieve a new sustainably successful company per month?
David Cummings on Startups 