At SyndicateRoom we go through a lot of business plans so you can imagine that I've seen some incredibly fascinating ideas in addition to some that are less than exciting. While I personally have not amassed the data to make any conclusion on factors that predict the success of a startup, I have been doing a lot of research into studies that examine these factors and now feel is a good time to start sharing bits and pieces from my research.

I must put a small caveat into my research, while I could dig deep into things like industry, timings, and very specific attributes, what I have decided to do is examine factors that apply to all startups in all industries.

So let's start by looking at the team, and how experience as an entrepreneur and industry experience impact the success of a venture.

First, a question many ask and many argue. Does have experience as an entrepreneur have an impact on the success of your next venture? In short, yes it does but only if your previous venture was successful.

The most referenced study on the topic is one found in the Journal of Financial Economics volume 97, pages 18-32, published in 2010. It's a good read but to get to the juicy bit, "all else equal, a venture-capital-backed entreprenuer who succeeds in a venture (by our definition, starts a company that goes public) has a 30% chance of succeeding in his next venture. By contrast, first-time entrepreneurs have only a 21% chance if succeeding and entrepreneurs who previously failed have a 22% chance of succeeding.” (P. Gompers et al)

Clearly backing an successful serial entrepreneur makes sense but what surprises me most is that those who have failed previously are only 1% more likely to succeed the next time around than those who are working on their first venture. While I'd like to think that we learn from our mistakes, the data shows that clearly we don't learn enough.

Second, let's look at the impact having an entrepreneur with industry experience hason the success of a startup. Taking a look at the Inc. 500 list, 60% of the list is made up of companies whose entrepreneurs have a good amount of industry experience. Further, a study by the Kauffman Foundation, which surveyed 500 successful high growth founders. found that the typical successful founder was 40 years old, with at least 6-10 years of industry experience.



So when it comes to looking to back a startup, the experience of the team plays a role. Let's look at an example of a statup currently raising funds whose team includes both industry veterans and a successful entrepreneur. Canary Systems operates in the health-tech space and have developed an incredible, relatively affordable, device that allows family members to remotely monitor their elderly relatives, ensuring all is well and the best bit about the technology is that it does not require wifi to be set up in the place it is monitoring.

The executive team behind Canary includes William Cotton who spent 23 years within Boots, most recently as MD of Boots International, Stuart Sheehy who was previously Managing Director of Capita Medical Reporting and Finance and Business Development director for Bupa Home Healthcare, and to top it all off the successful serial entrepreneur Christopher Curry who co-founded Acorn Computers and General Information Systems (GIS).

As always I'll close by reminding everybody that investing in startups is very risky. Most startups (between 50-80% depending who you reference) will fail so all investors should be wary that they could lose all of their investment.