Failure helps you succeed, How does this happen in the world of entrepreneurship?

Startups are the locomotive of the economy, but many of the owners of these companies lack the knowledge and experience in the field of entrepreneurship, in addition to the difference in potential and societal value.

In this report , published by the Turkish website "istiklal", writer Handa Ortay said that competent venture capitalists are needed to filter out the best potential new startups and help them overcome difficulties and achieve success. But this financing is usually given to experienced entrepreneurs who have established successful projects and managed to win the trust of customers, suppliers and banks.

The writer stated that startups create new job opportunities and their innovations provide new products to consumers and contribute to improving their well-being and providing more choices.

What are the ingredients for a successful startup?

Starting and financing a new company is very risky, because many startups collapse in a short time. What are the characteristics of a successful startup that deserves access to capital?

Some entrepreneurs become serial founders by launching other projects after completing their first startup, regardless of whether the first venture was successful or not. Researchers are studying whether these serial founders are more successful than start-up entrepreneurs.

The study includes venture capital-funded start-ups in the United States that were established between 1986 and 2000, and includes data on 3,796 companies and 8,753 entrepreneurs. The company's success is evaluated based on whether it has offered its shares to the public until December 2007, or has submitted the necessary documents by that date. The data also shows whether the company was incorporated into a chain of companies, and whether the founders, or at least one of them, had previous experience in establishing a venture capital-funded startup.

The number of entrepreneurs increased slowly between 1980 and 1994, then the pace accelerated to nearly double between 1994 and 1995, and this is explained by the spread of the Internet. Between 1980 and 1990, the number of founders receiving venture capital increased from 11 to 1661, and the proportion of serial founders increased slightly from 7.1% in 1985 to 9.5% in 1999. This means that the number of registered companies has multiplied more than 100 times.

The writer explained that the chances of success of startups were varied, as the percentage of companies that reached the IPO stage did not exceed 25.7%. The success rate of the company in the first attempt of incorporation was 36.7% and 29.1% in the subsequent attempts. The success rate of startups founded by serial founders was 4 percentage points higher than those founded by start-up entrepreneurs.

On average, the chances of success in starting a larger company were 30.3% for serial entrepreneurs who built successful startups, compared to 21.8% for those with previous failed experiences.

It was found that serial founders who established successful companies were 30.3% more able to launch other successful projects.

Empirical evidence shows the consistency that exists in successful startups. According to experts, this is due to two main factors, the first is the fact that a successful project is the outcome of effective skills, such as management skills, and the second is the right choice of time to launch a particular product.

For example, 52% of computer companies founded in 1983 were successful, while this percentage declined to 18% only two years later.

Previous successes are also factors that increase the confidence of investors, suppliers and potential customers. In this way, the chances of obtaining financing increase, which increases the chances of success of the startup.

The writer indicated that only 46% of startups can raise venture capital at an early stage, while it reaches 62% for companies that belong to serial founders.

Whereas start-up founders get seed funding after 37 months, seasoned founders only get funding after 20 months, which means that startup founders have a hard time raising venture capital, and they wait almost twice as long.

And when the venture capitalist is an experienced investor, the probability of success of a joint venture startup is around 21.7%, and about 5 percentage points higher than the start-up venture capitalists. The success rate of novice entrepreneurs who receive funding from experienced investors is 20.9%, compared to 14.3% for inexperienced venture capitalists.

The researchers argue that "market timing" also affects a startup's chances of success, depending on the industry it belongs to. If an entrepreneur launches their first company in a booming year, their next venture has a 30.5% chance of success. If the opposite happens, the project success rate is only 23.7%.