Funding Rejection Statistics Of Key Players
Sramana Mitra
Founder and CEO of One Million by the One Million (1Mby1M) Global Virtual Accelerator
You’ve often heard me say that over 99% of the entrepreneurs who seek financing are rejected. This post offers a set of rejection statistics culled from credible sources on some of the key players:
YCombinator: 97.15%
"YCombinator started as a summer programme and the roots still show, with courses running for three months, about the length of an academic summer break. Teams all join at the same time, in batches. Applicants are rigorously screened and the best invited for interview. For the latest batch 74 (including six not-for-profits) were selected from a field of more than 2,600. Those lucky few get paid between $14,000 and $20,000 to attend. In return they have to hand over about 7% of their firm’s equity." [Source: The Economist]
AngelList: 98.8%
Most of the startups on AngelList don’t get funded, just as most of the startups anywhere don’t get funded. A recent Economist article quotes some specific numbers on AngelList (as of 2013, I believe):
“Second, thanks to websites such as AngelList, startup financing has become more transparent. Originally a social network for startups and investors, AngelList is now also a funding exchange. As of early December its 24,000 accredited investors (people with a net worth of more than $1m or income of more than $200,000 a year) between them had put $250m into more than 1,000 startups of the total of 85,000 listed on the site.” [Source: From leafy to lofty, The Economist]
Some of these startups, btw, get financed outside of AngelList, and still maintain their profiles on the exchange for PR/visibility reasons, so the actual number of startups that eventually get funded is slightly higher, even if it is not on the exchange itself.
Andreessen Horowitz: 99.3%
Here’s a quote from Marc Andreessen:
“At our venture capital firm we only invest in a sort of Silicon Valley–style tech. We see 3,000 inbound deals a year. And those are inbound and coming through our referral network, so those are sort of prequalified. We can do maybe 15 or 20 investments out of the 3,000 a year. So I like to say our day job is crushing entrepreneurs’ hopes and dreams. Our main skill is saying no, and getting people to not hate us.”
Source: Inside the mind of Marc Andreessen – Fortune Management
If you get rejected by Accelerators, Angels or VCs, and they don’t tell you why, you need to understand the objections and the analysis that led them to their decision. Most good investors take the time to explain. Also, there are some fairly standard reasons why entrepreneurs get rejected by investors.
Looking For More Hands-On Advice?
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To give entrepreneurs all over the world access to Silicon Valley’s knowledge, methodology, and network, I founded the One Million by One Million (1M/1M) global virtual incubator. 1M/1M aims to nurture a million entrepreneurs to reach a million dollars each in annual revenue and beyond, thereby creating a trillion dollars in global GDP and ten million jobs.
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Photo Sean MacEntee/Flickr.com
Business Strategist, Freelance Writer, Wharton MBA - I craft business plans that answer the questions investors and stakeholders ask most often. My plans have helped entrepreneurs raise $100,000 to $15 million.
10 年Thank you for providing credible sources for the oft-quoted statistics. As a writer, I am always seeking the best sources for backing up my points.
President & Founder of The Arizona Wave Sports and Entertainment. What Arizona has not seen yet.
10 年there seems to be a farce in who and what investors and "angels" are. they are just lucky and should be grateful , spread the bread, empower and support others.
Founder at Reflexical Pte Ltd | Contributor at the Flex Ecosystem: Let's Flex ??
10 年Those are the numbers for the applicants from their respective pools. And hence these stats hide some important information. For e.g., if someone were to apply to all 3 of these, statistically, they have a 4.7% probability of success (i.e. 1 - (0.9715 x 0.988 x 0.993). If they apply to many more, the probability can easily go up to 10%, which I think is a fairer representation of the probability of a team getting funded if they really go for it.
Frank those are some great words. So true in my experience. I would just add that with each of our funding rejections my group learned yet another way of how not to do our projects. Over the course of time we gradually incresaed the percentage of project funding in each successive program. It takes MANY bites of the apple to get it done.
After 25 years in digital asset creation and team development, I now explore the dynamic between humans and technology. MSc Cyberpsychology, Ethics, Privacy, Security, and AI.
10 年A valuable message that needs to be delivered! Great article with solid facts to back it up. Failure is not only an option it is a reality. How you deal with it is what is important. Too many one liners out there are very misleading. Understand that success is more than hard work and degree and positive attitude. I think we have a much to learn from the failed requests for funding as we do from the successes. Reality. Know it when you start your planning.