We recently embarked on the monotonous yet important task of analyzing and updating a large chunk of Minnesota’s technology companies in the database. This phase of audit was simply intended to clarify which companies were still alive/active and which ones were not/dead, as viewable here.
There were approximately 550 companies that had been tagged as “startup” over the recent years, representing about 25% of the overall database!
There is no exact definition, though anything really early stage was a “startup” (more on this later). These were the takeaways from the review:
1. Before there was Y, there was X.
A visible pattern of starts and stops over time, where the founder/entrepreneur created and launched something, repeated, until finding traction. Three clear cut examples include:
- Aaron Kardell (ConnectED – Send On Cue – iGarageSale – Deals.by – Mobile Realty Apps – HomeSpotter)
- Clay Collins (LeadBrite – LeadPlayer – LeadPages)
- Parag Shah (Prodality – LunchBox – PurchaseBox – ForMyChildren – BookBottles – Vemos)
This indicates that experimentation (hypothesis and action combined with some scientific measurement followed by adjustment) and persistence can pay off, and there remain a number of entrepreneurs actively engaged in this method in pursuit of traction.
2. Closure by sector.
Consumer (deals & subscriptions), Fintech (lots of ‘cause’ fundraising and payments) and edtech experienced the most concentrated cluster of false starts. Maybe these areas seemed easier to break into and succeed at than they actually are?
There is a visible opportunity for the hungry entrepreneur or thirsty investor to identify dead assets and that retain value; something as simple as acquiring the IP of the customer list, relationships, or development chops of a dead/languished asset.
3. The numbers tell it like it is.
Roughly 80-90% of those that have entered the database over the past seven years are no longer operating at all, probably 50% of those still active are operating as zombies – not profitable nor scalable – rather just existing in limbo. Maybe 1-5% have made it to a point of becoming a sustainable and scalable business. That’s the reality of this stuff, and entrepreneurship is about letting the market determine what it values enough to pay for – or not – the axiom of business.