Analysis of $1B+ startup exits

After the announcement of the acquisition by Walmart for $3.3B, CB Insights published a blog post about the fastest $1B+ exits for US VC backed companies.

I was intrigued that companies could raise a round of funding and exit for over $1B in such a short amount of time - so it lead me to examine these companies further. I wanted to try and understand what makes/made these companies tick? How did they become so successful so quickly? Are there any similarities or trends amongst the group?

This post goes into some of the findings of the above companies and other $1B+ exits. By no means is this an in-depth analysis of these companies. Just scraping the surface.

First, I researched the above companies and looked at the following information:

  • Founded date
  • Acquired date
  • Amount Raised
  • Amount Acquired for
  • Acquired by
  • Market
  • Location
  • Founders
  • Founders Education
  • Founders Previous Exits

After finding most of the above information for these companies, there wasn’t really any exciting insights that emerged. So, I decided to expand my research a bit. I extended the list of companies by 7 by adding additional $1B+ exists that took place after 2010. These companies were*:

  • Autonomy
  • Nest Labs
  • Quest Software
  • Tumblr
  • Yammer
  • LinkedIn
  • Dollar Shave Club

I then studied the same information for each of the above companies. Here is what I found out.

While the time from receiving their first round of funding to exit was short (as CB Insights stated), the average amount of time the companies were in existence (from founding date to exit date) was 8 years.

Also, while all of these exits were massively successful, WhatsApp and LinkedIn are in a league of their own**.

Of these 17 companies, 70% were headquartered in California.

When it comes to education 40% of the companies have at least one founder with an advanced degree. These degrees are from universities such as Stanford, Harvard, Carnegie Mellon, and Cambridge — you may have heard of them.

While I wasn’t able to find education details on 3 of the founders, one didn’t go to college — David Karp (Tumblr) — and one dropped out — Jan Koum (Whatsapp).

Off the 22 known colleges and universities, 27% of the founders went to Stanford University and 77% of the founders went to school in the United States.

87% of the founders have a technical, science or financial degree of which 70% have a Technical or Science degree.

As for the number of founders per company, 79% had at least 2 founders. Of the companies with 2+ founders, 77% either went to school together or worked together at a previous company.

53% of the companies have at least one founder with a previous exit. This means 47% of the companies had founders where this was their first exit!

So, what can you conclude from all of this? If you are interested in starting or joining the next startup unicorn, you may want to consider the following:

  • If the founders have previously worked together (66%)
  • If the founders have had successful exits in the past (53%)
  • If the founders are well educated — Stanford education a plus (27%)
  • If the founders have a technical, scientific and/or financial degree (87%)
  • Where they are based — based in California (70%)
  • Oh, and being apart of a company with disruptive technology in a large market would probably help.

*I did not include Autonomy or Quest Software in this chart as I was unable to locate how much funding they raised.

** I did not include Skype as that had been previously sold before it’s final acquisition to Microsoft in 2011

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