A new infographic from the Startup Genome Project 2.0 attempts to provide answers to a question we all would love an answer to: why do some start-ups succeed while others fail?
In a world where the cost of creating new ventures is plummeting and traditional structures have gone out the window, new business lessons learned by start-ups are expected to lead to the massive restructuring of all traditional corporate structures by the middle of the 21st century.
According to an infographic created by the Startup Genome Project, while traditional small businesses have 75pc success rates over their first two years, start-ups – even with VC backing – have a 75pc chance of failing.
The Information Era in which most start-ups operate is defined by plummeting costs of entry for new ventures, instant connectivity between customers and business, global competition and the re-imagining of new and traditional markets as part of a connected world.
To make start-ups work they need A-players with vision, execution, risk-taking and people-listening skills. Workers work in close proximity, with late nights and cramped workspaces a daily reality. Feedback loops are critical and entrepreneurs are constantly seeking customer feedback.
Entrepreneurs who take on mentors saw three-and-a-half times more growth and attracted several times more investment than those without mentors.
In the US alone, $1trn of GDP is accounted for by nine companies, some of whom barely existed 15 years ago, including Apple, Amazon, Salesforce, VMware, Facebook, Twitter, Groupon and Zynga. All began as start-ups.
The top start-up ecosystems in the US are Silicon Valley followed by New York City and LA. Silicon Valley has a 40-day average time to hire an engineer while the cost of capital in New York is lower than Silicon Valley. Southern California produces 3,000 software engineer graduates a year, more than any other metro in the US.