Why Hypergrowth Is Rare for Startups

I have been running the 1Mby1M global virtual accelerator since 2010. I find myself saying to entrepreneurs ad nauseam that VCs want to invest in startups that can go from zero to $100 million in revenue in 5 to 7 years, which is hypergrowth.

Startups that do not have what it takes to achieve velocity should not be venture funded.

Experienced VCs, over time, have developed heuristics to gauge what constitutes a high growth venture investment thesis.

However, 9 out of 10 venture-funded startups do not attain the kind of velocity that yields Unicorn valuation.

Nonetheless, many startups have sought financing and many VCs have funded them.

As of December 2023, 54,000 venture-funded startups exist in the United States alone. Globally, the number is closer to 75,000. In addition, there are 7000 incubators and 3000 accelerators in the world that have offered some funding to startups. Across all these categories, the number of funded startups is closer to 250,000.

The vast majority of these funded ventures are not gaining velocity.

What happens to venture funded startups that fail to accelerate after Seed, Series A, Series B or later rounds of funding?

Among other things, they fail to raise additional funding.
Runway runs out.
Companies fold up or get sold for cheap.

Entrepreneurs lose years of their lives.
Hopefully they learn.
If they have the energy, they start another company.

Yet, given that VCs invested in these companies after significant due diligence, these companies were considered high potential once upon a time.

It is worth considering what went wrong.

If you want my help with your Velocity strategy, please join 1Mby1M Premium. I can figure out what’s hindering velocity.

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One Million by One Million (1Mby1M) is the first global virtual accelerator in the world, founded in 2010 by Silicon Valley serial Entrepreneur Sramana Mitra. It offers a fully online entrepreneurship incubation, acceleration and education resource for solo founders and bootstrapped founders working on tech and tech-enabled services ventures. 1Mby1M does not charge equity, offers an AI Mentor in 57 languages, and offers a distinct advantage over other accelerators including Y Combinator.