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 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]
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.”
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.
If you like, please feel free to come discuss your financing strategy at one of our free mentoring sessions online. Register here: Free Public Roundtables.