It’s a little intimidating to see how many tech/web startups are poppin’ up these days. KillerStartups.com weeds presents over 15 startups a day on their blog and encourages readers to vote for the next big thing. Sometimes, it discourages me how absolutely ridiculous and useless some of these startups are. In fact, the quality of a lot of these startups really doesn’t reaffirm what investors have been saying recently: “This is not a bubble, there is really value creation.” It’s mind-blogging the amount of time, effort, blood, sweat, and tears that people have invested in some of these ideas… only to inevitably exit the market.
Take Y Combinator, which arguably selects the best and most promising companies to invest seed capital. (It has an acceptance rate that rival that for the Rhodes Scholarship.) I’ve found that YC has to date invested in approximately 220 startups, 12% of which have been acquired and another 12% of which are defunct. Of all the startups, I recognized only about 9% of them.
I consider myself at least somewhat knowledgeable about tech entrepreneurship. And while I do acknowledge that some of these startups may still be gaining traction, or may be targeting the B2B market instead of end consumers, these statistics are still not promising for the young entrepreneur. Since YC itself benchmarks VC performance with a 4/10 portfolio company success rate, this data also does not bode well for its unique seed accelerator model.
I think my main point is that entrepreneurship has gotten awfully sexy, as of late. The recent college grad should really examine the sobering facts before making the leap.