Funded Analytics

TEN Capital’s Predictors of Funding

TEN Capital has helped entrepreneurs raise funding since 2009. From the data collected over the years, we’ve been able to predict who should and should not raise funding based on the average of all the companies raising funding.

In analyzing the data we found the variables we tracked did a good job of predicting the firms that did not receive funding. In other words, this collection of variables would seldom (<1% of the time) yield a false negative. In our analysis only a small number of firms that “should” not have received funding actually received funding.

Additionally, some variables were much more powerful than others when predicting a funding event.

  • Type of Business: Firms in the “consumer” industry were 22 times more times likely to receive funding.
  • Stage: firms that had received previous institutional funding were 16 times more likely to receive funding than those that did not.
  • Clear Competitive Advantage: Firms that stated a clear competitive advantage were 4 times more likely to receive funding.
  • Problem to solve: If the problem was perceived as relatively easy to solve, the firm was 3 times more likely to receive funding.
  • Team: More experienced teams were 3 times more likely to receive funding.
  • Fundraise: firms that had raised any previous funds were 2.5 times more likely to receive subsequent funding.
  • Sales: it seems that firms with more established customer bases were actually a bit less likely to be funded.

Variables that were not significant predictors:

  • Level of detail of financials
  • Broad vs. narrow target market
  • Whether or not the firm was currently in business
  • Whether or not the firm had an exit plan
  • Level of IP
  • Whether or not the firm had a prototype
  • Level of competition identified.

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STAGEFundedNot FundedGrand Total
Growth(outside of FF)4162020%
Scale (institutional)30104075%
Seed (family friends)226287%
(blank)2111315%
Grand Total3863101
TEAM EXPERIENCEFundedNot FundedGrand Total
0 Incomplete (solo founder)15617%
1 Inexperienced (< 5 years industry experience)26825%
2 Complete (2 or more founders)9283724%
3 Experienced &Complete 2 or more founders each with 5+ years industry experience)21133462%
(blank)5111631%
Grand Total386310138%
TYPE OF BUSINESSFundedNot FundedGrand Total
Consumer21214250%
Healthcare841267%
Other23540%
Tech3242711%
(blank)41115
Grand Total3863101
COMPETITIVE ADVANTAGEFundedNot FundedGrand Total
0 None (no advantages identified)4172119%
1 Weak (1 advantage identified)14233738%
2 Strong (2 or more advantages identified)15122756%
(blank)5111631%
Grand Total386310138%
PROBLEM TO SOLVEFundedNot FundedGrand Total
1 Easy (no IP, basic execution)5162124%
2 Hard (substantial IP)29366545%
(blank)4111527%
Grand Total386310138%
SALESFundedNot FundedGrand Total
0 None10283826%
1 Interest (beta users)751258%
2 Purchase (paying customers)561145%
3 Repeat purchase (repeat paying)791644%
4 Subscription42667%
(blank)5131828%
Grand Total3863101
CURRENTLY ON BUSINESSFundedNot FundedGrand Total
0 NO6222821%
1 Yes28295749%
(blank)4121625%
Grand Total386310138%
PATENTSFundedNot FundedGrand Total
0 No patents21375836%
1 Patents (at least 1 provisional patent)12152744%
(blank)5111631%
Grand Total386310138%
DO THEY STATE PROBLEMFundedNot FundedGrand Total
0 No9283724%
1 Yes25244951%
(blank)4111527%
Grand Total386310138%
TARGET MARKETFundedNot FundedGrand Total
1 Narrow (sell to only 1 industry segment)15243938%
2 Broad (sell to more than 1 industry)18284639%
(blank)5111631%
Grand Total386310138%
PRODUCTFundedNot FundedGrand Total
0 None111128%
1 Prototype11172839%
2 Completed22244648%
(blank)4111527%
Grand Total386310138%
IS PRODUCT COMPLETELY DEVELOPEDFundedNot FundedGrand Total
1 Strongly Agree10152540%
2 Agree1392259%
3 Neutral770%
4 Disagree7111839%
5 Strongly Disagree4101429%
(blank)4111527%
Grand Total386310138%
FINANCIALSFundedNot FundedGrand Total
1 General (high level, abstract numbers)29497837%
2 Detailed (specific costs and revenues identified)43757%
(blank)5111631%
Grand Total386310138%
RISK ASSESSMENTFundedNot FundedGrand Total
0 NO31528337%
1 Yes22100%
(blank)5111631%
Grand Total386310138%
FUNDRISEFundedNot FundedGrand Total
1 General (high level, abstract numbers)29497837%
0 None51510%
1 <$50K11100%
2 <$100K11100%
3 <$200K22100%
4 <500K88100%
5 <$1M51683%
6 <$2M1616100%
(blank)5111631%
Grand Total386310138%
EXIT PLANFundedNot FundedGrand Total
0 NO26406639%
1 Yes7111839%
N/A110%
(blank)5111631%
Grand Total386310138%
COMPANIES
N635
Funded Deals38
Non Funded deals597
Coded Companies101
AMOUNT FUNDED DETAILS
N38
Mean#REF!
Median#REF!
Mode#REF!
Std. DeviationErr:504
VarianceErr:504
MaxErr:504
MinErr:504
RangeErr:504
FUNDED
67%Sales
62%Experienced team
59%Perception of product developed
57%Detailed financials
56%Competitive advantage
51%Clearly defined problem statement
50%Healthcare/consumer over tech
49%Currently in business
48%More developed the product– more funded
45%Substantial IP
NO CORRELATION
Risk assessment
Exit plan
Target market
Risk assessment

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