This is not a statement of doom and darkness. It’s just math.
Each and every person these days has a startup idea. All of them have one dream – to make the next killer app and get rich. But, before you jump on the bandwagon, do read.
Good data is hard to come by. But estimates are that only 1 in 10 startups get an angel/seed round of funding. Out of these, only 1 in 10 make through Series A,B,C funding. Do the math. Just 1 in 100 startups make it to the series rounds, leaving the other 99 in the elephant’s graveyard. Only a tiny fraction of the funded 1% ever hit the unicorn stage, and rarer still are the ones that get a successful IPO. The data could vary depending on who you believe. Either way, only a tiny fraction ever get to a stage of funding where the startup can build a serious business.
The game only works if few survive. Only then can they get the dizzying valuation. It is in the interest of the investors to pick just a few winners and leave the rest to their fate. These winners and their investors create such a hype that everyone is forced to say “hey I am missing out; I want in”. Everyone wants to be in that Casino.
There is also a lot of good that is coming about with this gold rush. A lot more people are looking at a lot more problems in the world to solve. A lot more minds are getting connected. A lot of fundamental business paradigms are being questioned. A lot of enterprises are created.
But what about the Club 99 and all those associated members – founders, workers, early investors, families, vendors etc. What are they supposed to do? They have sacrificed time, money, opportunity and relationships to chase a dream which turned into a nightmare. Their livelihood cannot be just brushed away in words like ‘boom and bust cycle’, ‘down rounds’, ‘winner takes all’ and any other term used frequently within the startup circles.