It’s the elusive gold-dust of Silicon Valley. The goal that 100% of startup founders have, but only 10% get. The thing that venture capital firms stake millions on.
VCs take risks on their intrinsic ability to predict that success.They use a combination of instinct born of experience, due diligence with business plans and an evaluation of the founding team to decide whether the rag-tag group of hopefuls sitting across the table is worth that risk.
But browsing the catalogue of flunked startups, you can see that some of the biggest names in venture capital have lost large sums to ideas that seemed great but ultimately failed. In fact, some believe that as few as 5% of VC firms are even making money on their investments.
How to predict success
When promising startups fail, the reasons given for failure seem varied – wrong timing, legal disputes, lack of vision, excessive spending, or internal conflict. But ultimately, it all comes down to one common element: the entrepreneur behind the idea and the team that’s running the show.
The right founder is the key to predicting success, but evaluating a management team is tricky and often investors are just taking a giant, scary, expensive leap of faith.
How do you predict founder success?
There’s a tendency to believe that what produces success or failure is really a matter of luck – market wasn’t ready for your idea? Too bad. Couldn’t figure out how to turn high user uptake into cold, hard cash? That sucks. So elusive is founder success that it has an aura of the mythical about it: startups worth over $1 billion are even known as unicorns – something magical and otherworldly.
But we don’t need magic. We need science. And science has proven that many of the failures that befall startups are in fact predictable, and they largely have to do with the strengths and weaknesses that make up the founder. Fingerprint for Success has conducted a long-term scientific study measuring the motivation levels around 48 different areas of life and work in startup founders.
We found a pattern among those founders who were successful – statistically significant commonalities that set successful startup entrepreneurs apart from the general population, as well as from founders who had failed.
With this knowledge, predicting the success of a startup becomes notably more tangible.
Failure isn’t a foregone conclusion
There’s one other great finding from the study, which is that founders who don’t hit the ‘green zone’ for startup success aren’t doomed to failure. Entrepreneurs with great ideas and strong business plans but who currently aren’t focused on the same things as successful founders can dial up ( or indeed, down) their preferences to optimize their motivations for the best chance of success. With regular attention and guidance from a qualified coach, anyone can attain startup success.