Evelyn YK's Blog
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Lucky ones to get funding - 1/3 of 1% !!!
I met with my very good friend Stephen Ibaraki yesterday morning in Vancouver, Canada, and we had a great time discussing the challenges young companies have getting funding.
Some numbers: Top tier Silicon Valley venture capital firms receive an average of 15 deals per day — that's about 330 deals they look at every month (almost 4,000 companies per year)! Of these companies, 3 at most will be the lucky ones to get funding each month. Of the companies that get funding, over a period of time, 1/3 of them will be gone, 1/3 of them will be breaking-even, and at most 1/3 will be profitable. So of about 4,000 companies that present their deals on an annual basis, only 12 are funded and become profitable. This means that at best 1/3 of 1% of young companies making VC presentations can expect to make it in this super competitive environment.
Dear fellow entrepreneurs: this is the reality! I don't mean to discourage you with these figures, but it is important to recognize the environment you're working in. Don't feel sorry for yourself if the going gets rough, since it is tough out there! Keep up your spirits, work hard, work smart and keep trying, and you will achieve your dreams one day ! Please remember, Never give up !
With my best wishes and greetings, Evelyn YK Lee
Edited: Oct 18th, 2008
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- Oct 18th, 2008
Marion Freijsen
Thank you Evelyn for sharing your experiences. And thanks for pointing out in particular that you should not give up on your dreams - being creative in ways of finding funding and most of all, being well prepared when you DO pitch will make the difference for everyone out there. You can be amongst that 1% - if you prepare your pitch well. This is why we have started the Funding Master Classes for our E.Factor members. Over a series of 2-4 sessions per group, we have experts help you prepare your pitch and share with you how to present it in the best possible manner. Do join us! See more details under the Do Business section - MasterClasses tab. -
- Oct 20th, 2008
Lee Drake
What that means for the other 99.5% that do not get funded is that you should look and plan to bootstrap as much as you possibly can. Bootstrapping means either building the beginnings of your venture using FFA funding (Families, Friends and Acquaintences) or building something that makes you a smaller amount of money now to build into something larger later. Of course you should continue to seek funding - but in the meantime why not make your application or idea better in the eyes of the funders by showing it can work. And every one of the dollars you spend during this bootstrap time are precious. You don't want to see them go to waste. For instance at my company Os-Cubed (www.os-cubed.com) we help bootstrapping entrepreneurs to develop demo and proof-of-concept versions of their software which improves their chances of funding. We do this by working together with the entrepreneur to reveal the core features that make their product tick, then to build out demo versions of those features so they can test them in the real world. If you are going for funding, but haven't made it yet - be sure you spend your hard-earned FFA funding correctly. I'll also echo Marion's comment - taking classes specifically for learning the ins and outs of how to pitch can make a huge difference. I've been through such classes locally and can tell you they make a difference not only in your pitch but in how you think about your business. For more on the software side of "spending your FFA dollars wisely" you can also read some of the posts in my blog: entrepreneur-blog.os-cubed.com. Keep your chins up and keep getting in front of investors - its not hopeless, just challenging - and us entrepreneurs are up for a challenge :)