Last week, Y Combinator President Sam Altman tweeted:
the track record of software startups that raise gigantic first rounds (say, 30MM+) is pretty bad.
— Sam Altman (@sama) June 5, 2014
Anecdotally, Altman’s point appears to have some basis. A day after Altman’s tweet, mobile payments startup Clinkle, which raised a seed VC funding last year that has since ballooned to $30M, announced the latest in a string of exec departures.
Naturally, we wanted to see if CB Insights data confirmed or disproved Altman’s view. Specifically we looked at U.S.-based VC-backed exits greater than $100 million in the Internet, mobile and software (non-Internet/mobile) sectors since 2007 and their initial funding amounts.
Based on the data, it’s actually all pretty random as software exits over $100 million have raised pretty varying amounts in terms of initial funding. However, given the power law nature of venture capital, it is worth noting that eight of the ten largest VC-backed software exits over the period all raised less than $10 million in their initial round of disclosed funding. The median raise by these companies was $4.9M. Of course, it’s also important to note that this analysis only looks at reasonably successful software exits at a high valuation threshold and does not take startup failure into account.
Note: Analysis included the outlier exits a la Facebook, Twitter, WhatsApp, etc but those points are not shown on the chart below.
All of the data in this post is available on the CB Insights venture capital database. Sign up for free below.