Decoding Startup DNA

A recent joint study by Silicon Valley VC firm Blackbox and academics from Stanford and Berkeley universities provides some interesting insights into what makes Internet start-ups successful. The project involved 650 web start-ups predominantly investor funded and based in Silicon Valley. However the findings also have relevance for tech firms outside of the Valley ecosystem.

“Entrepreneurship is strongest at the intersection of science and art”, say the research authors who set out to define the science of technology entrepreneurship more clearly through a better understanding of what drives entrepreneurial success. By codifying the features of high performing tech start-ups the researchers hope this success can be replicated elsewhere. The research findings naturally extend much of the methodology ingrained within the lean start-up movement; for example it was found that companies that pivoted once or twice did better than others in terms of both market growth and capital-raising.

The study identifies a typology of three major types of Internet start-ups based on the approaches to customer development and acquisition. It also describes a set of common milestones and stages that start-ups tend to have in common. Companies that skipped stages tended to do less well. But perhaps the most interesting finding was that start-ups with balanced teams of business and technical oriented founders achieved the most success overall and chose the right time to scale up after validating their markets.

The report can be downloaded for free.

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