I had been pondering and discussing this on twitter with Eric so wrote this:

You’ve done a good job highlighting the important distinction between correlation and causation. Tom’s article, and mine, both highlight the correlation, and call out how strikingly large that correlation is. You’ve highlighted a good list of possible underlying causes for that correlation, which is a more granular version of some of the items on my list. I would suggest adding the possibility that having more runway makes it more likely that the company will be able to generate the evidence that their business is working well enough to justify a Series A financing. Given that the list underlying causes are likely to be highly correlated with one another, are subjective, and hard to quantify, it seems to me that it would be very difficult to statistically measure their relative importance.

I totally agree that raising a Series A financing is in no way a guarantee of success. The odds are still significantly against the company succeeding after completing a Series A financing. But, I do think it is almost necessary condition for creating a valuable company — especially among the subset that have raised Seed money. There are some exceptions, but it is a tiny percentage on a count basis, and an even tinier percentage on a returns basis.

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