As an entrepreneur, I frequently see entrepreneurs failing. I wonder why it is so common for entrepreneurs to fail and how the successful entrepreneurs succeed. There must be a way to crack the formula of startup success and reduce the failure rate of entrepreneurs. The Startup Genome Project has an answer to this question.

A group of international entrepreneurs (Bjoern Herrmann, Max Marmer, Fadi Bishara, Aleksandra Markova) came together to crack the “innovation code” of the successful startups like the Human Genome Project’s attemps to crack the human genetic code. They released the first Startup Genome Report with in-depth analysis on what makes internet startups successful based on data from 650+ Internet startups. The list below shows 14 indicators of success from the report. You can download the full report for more details.

1. Founders that learn are more successful: 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.
2. Startups that pivot once or twice times raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all.
3. Many investors invest 2-3x more capital than necessary in startups that haven’t reached problem solution fit yet. They also over-invest in solo founders and founding teams without technical cofounders despite indicators that show that these teams have a much lower probability of success.
4. Investors who provide hands-on help have little or no effect on the company’s operational performance. But the right mentors significantly influence a company’s performance and ability to raise money. (However, this does not mean that investors don’t have a significant effect on valuations and M&A)
5. Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot.
6. Business-heavy founding teams are 6.2x more likely to successfully scale with sales driven startups than with product centric startups.
7. Technical-heavy founding teams are 3.3x more likely to successfully scale with product-centric startups with no network effects than with product-centric startups that have network effects.
8. Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.
9. Most successful founders are driven by impact rather than experience or money.
10. Founders overestimate the value of IP before product market fit by 255%.
11. Startups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely.
12. Startups that haven’t raised money over-estimate their market size by 100x and often misinterpret their market as new.
13. Premature scaling is the most common reason for startups to perform worse.They tend to lose the battle early on by getting ahead of themselves.
14. B2C vs. B2B is not a meaningful segmentation of Internet startups anymorebecause the Internet has changed the rules of business. We found 4 different major groups of startups that all have very different behavior regarding customer acquisition, time, product, market and team.

I hope this report will help all entrepreneurs like me to succeed and thanks for the contributors.

If you are an entrepreneur trying to introduce your startup or business idea to potential investors, you need the right “one sentence pitch for your startup” to attract the VCs or angel investors. Investors hear, on average, five to ten presentations each day from entrepreneurs. You’ve got one minute to grab an investor’s attention. Kicking your presentation off with a one sentence summary that highlights your idea and its potential value will help you get them interested.

Summarizing your business plan in one sentence is very hard but Adeo Ressi from Founder Institute can help you perfect the art of the one sentence pitch in an easy way. Ressi says “Most entrepreneurs manage to screw it up… How much better would the world be if every startup could explain their business well in one sentence?” . He has created created a rudimentary template in Mad Libs style:created a rudimentary template in Mad Libs style:

My company, __(insert name of company)__, is developing __(a defined offering)__ to help __(a defined audience)__ __(solve a problem)__ with __(secret sauce)__. You can see in the video below, how to use Ressi’s helpful tool for young entrepreneurs.

Madlibs for Pitching from Video4 on Vimeo.

You can’t go a day without mention of the “credit crunch” in the media.  Everyday, new companies goes bust and the unemployment numbers are bleak. The unemployment rate hit 8.5 in US in March (8.1 in US in February).

Being an entrepreneur has always been a hard thing but in these tough times, it gets harder. Starting a new business or trying to expand a current business needs very much courage, when you look at around and see all those bust companies and unemployed people . We wondered and searched the net to learn how the entrepreneurs are handling the downturn.

Courage
A recent survey shows, 45% of entrepreneurs says “Yes”, 35% says “No” and 21% says “Not Sure” to the  “Is now the time to launch a new business?” question. Also in the US,69% of entrepreneurs stated that they will continue with their business growth plans despite the prevailing economic climate. Even in downturn, brave entrepreneurs are going on their ways and launching new businesses.

Resistance

Fear is a fatal feeling in the downturn; but feeling of hope is very important to take risks. Some desperate entrepreneurs won’t be able to resist the downturn but 78% of entrepreneurs expect their business to survive this downturn.

Responsibility

Companies are squeezed by the recession and the surplus of some companies reduced and become insufficient to pay salaries and bills. Some entrepreneurs cut own pay to stay alive and not to cut jobs. This is unusual even for a recession but a very responsible attitude. What a business owner tells is, “All those small-business books say, ‘Pay yourself first.’ [But] not paying myself enabled me to keep a couple of other people around,” he says. “It’s not [the employees'] fault that I bet on growth.”

You can read these, if you want to read more about this topic:

How entrepreneurs are feeling@ CNNMoney

Entrepreneurs Cut Own Pay to Stay Alive@ Wall Street Journey