Venture capital firm First Round has analyzed 10 years of data on its investments. The findings paint a detailed picture of factors that may lead to startup success. So what has First Round noticed about the greatest successes of its portfolio, which includes Warby Parker, Blue Apron, and Uber?
Women founders do fabulously.
This is the finding that seems to have gotten the most media attention. Startups with women in the lineup of founders did 63 percent better than all-male teams.
Youth is a success elixir.
When the average age of a founder team comes in under 25, the startup performed 30 percent better than First Round’s investments did on average. The average age of a First Round founder is 32.
College pedigree can make a difference.
Companies with at least one founder from an Ivy, MIT, or Stanford performed 220 percent better than those without.
The other kind of pedigree matters, too.If someone on your startup team cut their teeth at Amazon, Apple, Facebook, Google, Microsoft, or Twitter, you’re in good hands. Teams with founders who'd previously worked at these companies performed 160 percent better than others. So if you went to a public university and then got a gig with Google, you still have an advantage.
Repeat founders create more valuable companies.
Initial valuations for companies with experienced founders came in at about 50 percent higher than startups run by greenies.
Teaming up is smart.
Startups run by pairs or groups of founders performed 163 percent better than startups with only one founder, and had higher valuations.
A technical background can help enterprise companies...
...a lot. Enterprise companies with tech-experienced co-founders performed 230 percent better than the other guys. "But this isn't the whole story," noted the First Round post. "In fact, consumer companies with at least one technical co-founder underperform completely non-technical teams by 31 percent."
Location, location, location... doesn't matter.
Companies from places not known for being monster tech hubs do just as well as those in San Francisco and New York.
Go ahead and make that cold call.
It’s not necessarily about who you know. First Round found that companies it discovered through unconventional means like Twitter (as opposed to referrals) or whose founders went directly to the VC outperformed other startups in which the firm invested.
San Francisco is the new Silicon Valley.
There was a time when First Round invested in SF and the rest of the Bay equally. Now San Francisco claims 75 percent of First Round investees.
First Round based its performance evaluations on the difference in a company’s valuation between the VC firm's initial investment and current fair market value for the company or value at the time of an exit.