Growing up, I heard the phrase “you’re more likely to get hit by lightning than win the lottery” many times. Both have extremely low odds and are unlikely to happen (as an aside, I know a local real estate developer that’s been hit by lightning twice — talk about crazy low odds). Well, for entrepreneurs looking to raise money, there are fewer Series A rounds per year than people that win $1 million or more in the lottery per year according to well known investor David Hornik:
Entrepreneurs and the media alike love to talk about how much money startups have raised because it’s public and definitive. Well, in reality, 99.9% of startups that try to raise a Series A round fail. Yes, friends and family rounds are common but a Series A round from an institutional investor is actually quite rare.
Entrepreneurs would do well to nail the 8 metrics questions for raising a Series A and focus on the appropriate initial traction for their business. Oh, and remember, that vast majority of successful entrepreneurs never raised a Series A round.
What else? What are some more thoughts on the rarity of raising a Series A round?