14 Years To Go Public. What a Long Strange Trip It’s Been.

The data shows us that if you want to start a venture-backed company you’ll likely be doing exactly that… for a decent chunk of time. As Grateful Dead would say it’s going to be a long strange trip.

This week we dug into our proprietary dataset and analyzed over 240,000 rounds from around the world. To make sure the analysis is relevant and informative to current entrepreneurs and VCs, we limited our output to companies that:

  1. Have had at least one round of Venture Capital investment.
  2. Have already had an exit (Out of Business, Acquisition/Merger, or IPO)
  3. Exited within the past 10 years (2009-2018).

Prior posts have shown that VCs are receiving less ownership than beforeVCs like round numbers when pricing rounds, and VCs collaborate with each other on rounds *a lot*.

Here’s what we discovered

Beverly Hillbillies

Building a company of value is not a get rich scheme. Unlike the Beverly Hillbillies, you’ll be working at this for a while Jethro. The average venture-backed IPO takes 14 years. Acquisitions/Mergers take 10 years. And the average failed startup is still in business for 7 years before going kaput.

We also found that, as expected, the average company age of a Healthcare IPO was lower than a technology IPO. This makes sense because a lot of healthcare companies go public before profitability as an equity raise than an ‘exit’ round.

Over the past 10 years, companies completing an IPO have been getting older – Except this seems to be dropping the past two years. This may be evidence of a recent IPO window encouraging companies to go public sooner.

Perhaps most interesting to us, we found that the majority (52%) of companies that went out of business did so within 5 years. However, only 35% of companies that got acquired and just 13% of companies that went public did so within 5 years.

Founders. It takes a while to get to a (good) exit. Think about this when you form your team. Think about this when you pick your investors.

 

If you build a company that goes public you will likely be working with these people longer than the average marriage (!).

 

So just keep truckin’. You’ll get there.

 

Where you surprised by these findings? What question just popped into your head? That one. The question you’re thinking about right now. Tell me about it!

Reach out and chat with me (Collin West) on LinkedIn, Twitter, and especially in the comments section below for Q&A.

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