$243 Million: CrunchBase's Very Rosy Picture of the Average Startup Exit
A new dataset collected by CrunchBase paints a rather rosy picture of the average amount of money startups raise and the size of their exits.
According to the data, the average successful startup has raised $41 million in venture capital and exited for $242.9 million dollars since 2007. Among those that were acquired, CrunchBase reports startups raised an average of $29.4 million and sold for $155.5 million. Those companies that exited via IPO raised some $162 million before going public and $467.9 million through IPOs.
You can pick your jaw up from the floor now.
Looking at these exorbitant figures, it's important to note that CrunchBase was only looking at "successful" startups, which it defines as companies that raised at least one round of funding, then went public or were acquired after 2007, and disclosed the acquisition price. That means there's a whole slew of other companies, which CrunchBase's Mark Lennon says the site has yet to analyze. That includes companies that have either bootstrapped their way to an exit, have yet to exit, have folded, or simply haven't disclosed their acquisition prices. That, coupled with the fact that this list includes Facebook's sky high $18.4 billion IPO, the biggest Internet IPO ever in the United States, suggests that this data is significantly skewed toward not just successful, but uber-successful startups. Another thing to remember? CrunchBase data is all self-reported, and even Lennon admits that it's not always accurate.
For some perspective on the numbers I reached out to Reena Aggarwal, director of the Center for Financial Markets and Policy at Georgetown's McDonough School of Business. Her take? Take this data with a heap of salt.
"Those are very good numbers, but we should also keep in mind it's a time when the market has been doing extremely well," Aggarwal says. "I think the average might look really good but I wonder what the median looks like, because I'm sure there are some huge winners that skew the average to be much higher," she adds.
Still, there are some interesting (if unsurprising) conclusions from the report. For instance, the data shows that among these companies, there is a correlation between the amount of funding a startup raises and the size of the exit. That is, the more money these startups raised, the bigger their exits. That, Aggarwal, says, is to be expected. "If they weren't able to raise the capital initially I'm not surprised they're not the ones doing best going forward," she says. "The ones that were able to raise more capital were able to invest more capital and not run out of cash." There was not, however, a conclusive correlation between how long a company has been around and the size of its exit.
Meanwhile, the report also has decent data on the most successful venture capital firms based on the number of exits their portfolio companies have had since 2007. Ron Conway's SV Angel tops the list, with 47 exits on record. Sequoia comes in second at 35.