Mapping The Startup Genome: The 7 Signs Of Failure

When you want to map something like the “startup genome”, you know you need more than just your four co-working founder friends – you need an army of people and organisations who work with startups to make it happen. Enter the seed accelerator, Blackbox. Co-founded by techVenture, StartupSchool, and FoundersFirst, Blackbox’s extended team has a track record of working with 100+ startups, including 15 exits such as Bebo, Tapulous and Lala. Now, having profiled more than 650 web startups, Blackbox has released its first Startup Genome Report. It is the first major step toward cracking the innovation code and in their words, “spreading the magic of Silicon Valley to the rest of the world”.

A research project in collaboration with faculty from Stanford and Berkeley, Startup Genome hopes to accelerate the pace of innovation around the world by turning entrepreneurship into a science.

With this attempt to map the genome of a web startup, they’ve divided the lifecycle of a startup into 4 discrete stages and identified 4 very different types of startups. They also found that startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.

The key individuals behind this report are Max Marmer, Ron Berman and Bjoern Lasse Herrmann, together with the rest of Blackbox. Max and Bjoern are also part of Sandbox – an amazing global network of people under 30 (something I’m also privileged to be a part of).

(By the way, the 4 stage stages of a startup have been termed the “Marmer Stages” under the Startup Genome.)

The following is a deeper breakdown of some of the data they gathered. Look to see if you find yourself fitting in anywhere!

The 7 Signs of Failure for Internet Startups

(1) Not Working Full Time

People who work half time are able to raise money, but about 24x less than founders who go full time.

(2) Solo Founder or 4+ Founders

– Solo founders raise less than 50% what 2-3 founders raise. One reason for this is that during fundraising solo founders are now forced to split their time and attention between the product, the business and raising money.

– Solo founders have 290% less user growth and are 16% more likely to scale prematurely than founding teams of 2-3.

– More than 42% of the startups that are moving more than 20% slower than the average time needed to reach the scale stage are solo founders.

(3) Don’t Have A Technical Cofounder