Predicting Startup Success

When I was in business for myself, one thing became clear: I did not want to be in business for myself. I hated the paperwork. I liked the mingling and evangelizing services, but not at the expense of the actual programming and creative process. That experience has made me all the more appreciative of the people working to get local startups SproutBox, isocket and Big Treetop off the ground.

Predicting startup success is a difficult proposition. Most venture capital gets sunk into projects expected to fail, hoping just one will defy the odds and make the jump to the next level. Many good ideas fail under poor decision-making and fickle markets that cannot be controlled. Some are just unlucky.

YouNoodle hopes to decrease that uncertainty. The San Francisco company is attempting to build a platform of people, information and technology aimed to help university entrepreneurial clubs effectively manage business competitions, events, and community development. Their beta tool—Startup Predictor—is the first in a series of decision-making tools the company will introduce for the startup industry.

While I am a fanboy of startups and enjoy the creative atmosphere those first few years of growing a new company afford, the predictor tool seems a bit out of my area of expertise. An attempt to use their free startup rater was thwarted by financial information I didn’t have or properly understood. YouNoodle claims to have studied current and past startups and found some predictive patterns pointing to early-stage success. Someone else a little better aligned with their business-focused target user group will have to let me know if it produces a reasonable outcome.

Each startup company added to the system is rated on a 1,000-point scale intended to indicate the feasibility and promise of the company’s future. The algorithm looks at multiple variables, including founders and advisors’ backgrounds, business concept and team dynamics.

“We learned that a company’s DNA — the fundamental things that can strongly influence its future success — is generally formed in the very first days that the company is in business,” says Kirill Makharinsky, co-founder of YouNoodle, who led the development of the mathematical algorithm behind Startup Predictor. “Our technology analyzes data based on those early days — going back to the pure concept and the bones of the business built by the founders. Our research has proven that the patterns in the data we measure from those days can be surprisingly prophetic about how a company will perform in the future.”
Source: Aug. 7, 2008 press release

The Startup Predictor tool is intended to be an assessment of early startups. Later tools will focus on later stages in company development. There is a social resource matching component as well. By filling out a profile and entering startup data, members can be connected to other businesses and human resources that can help startups find missing pieces to their business puzzle.

It is an appealing idea, but my use of the site will probably be limited to scouting interesting startup companies before they appear on Killer Startups. Any business types out there want to give the predictor tool a test spin and see whether it works?