Last month, Gain Compliance marked its fifth anniversary.
Historically, this blog has memorialized this type of event with a short introspection of what each birthday signified: here’s last year, as well as our third and our first years. (Somehow, I skipped a blog post from the terrible twos.)
This time, rather than navel gaze on the accomplishments of the past twelve months (although Gain’s Product Page does a pretty good job of telling the “look-how-far-we’ve-come” story), I wanted to look at this particular milestone in the abstract.
In a previous post, I examined the (very bleak) odds of survival for early-stage startups.
Time and again, studies have shown that the failure rate for new companies is pretty awful. In fact, visually, the declining slope (representing the death of new companies) is a virtual free fall… until year five.
In interpreting this data, here’s the takeaway message from my prior post which, having lived the experience, I will attest is spot-on:
The Prospect of Stability
Notably, the data shows only marginally improving prospects across a company’s first years of operation. CB Insights plots the odds as follows:
For the small minority of startups which succeed in raising a first (seed) round of financing, 67% will ultimately fail.
Raise a second round? Your likelihood of failing plummets to….60%.
Raise a third round? Your likelihood of failing falls further to… no, wait, it stays the same… 60%.
The exceptionally high rate of failure of startups during their infant mortality stage is well known. What is not universally recognized is how long infancy lasts.
It turns out that most companies which make it a year and scrape together a round of financing will make it another year (or two or three). And that many companies can scrape together additional rounds of financing after pulling together a seed round. And that both of these things can happen, and do in a majority of cases, when the company still does not succeed.
When is a company generally out of the woods?
As the authors of the second survivability study referenced above study put it:
“survive the first five years and you’re bankable.”
Gain is now five years old.
We’ve got happy customers, a ridiculously talented team of 35 (and growing), a great sales pipeline, enviable product-market fit, bright prospects… in short, we have traction.