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Improving the Odds of Entrepreneurial Success

MIT’s advantageous ecosystem reveals three keys

Tom Kadala
Mon, 12/16/2013 - 10:09
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If you were sitting at a Las Vegas gambling table with a 3-percent chance of winning big, would you continue to play or fold? Guessing your likely response, let’s compare this example with launching a startup company. Statistics show that 97 percent of startups fail after their fifth year of operation, with nearly two-thirds failing during the first year.

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If your instinct would be to fold at the gambling table, why are so many institutions encouraging students to launch a new company when data show the odds are severely stacked against them?

If these numbers aren’t discouraging enough, consider the private equity firms that search through the rubble of startups in the hopes of selecting a winner. Their expectations are even more somber. Of the thousands of business plans reviewed per year, startup investment firms will fund, on average, four deals per year, knowing all along that three out of the four companies will either fail or break even after their first year of operation.

So, one might ask, can anything be done to improve the odds of success for a typical startup?

 …

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