🟢 Is there a statistical edge in backing certain repeat founders?

Over the past decade, we have observed patterns that challenge conventional wisdom and elevate the conversation about what makes a startup successful from the start. After investing over 500 hours collecting and analyzing data on thousands of European startups, we noticed something interesting. 

So is there a measurable edge to backing certain repeat founders? Let’s break it down.

_{*Disclaimers: 1) Correlation & Causation. 2) Data Limitations. We had to clean the data and exclude a small portion (<1%) of companies due to missing information.}

Repeat Successful Founders – The Proven Formula?

The logic behind backing successful repeat founders is sound. Founders who have built startups before bring critical experience—whether it's assembling teams, nurturing company culture, or navigating the tricky waters of fundraising and burn rate management.

Ben Horowitz once said, “Nobody knows how to be a startup CEO. It's something you have to learn.” And these founders have already been through that learning curve.

But can we quantify the edge that repeat founders have?

Research from MIT and the National Bureau of Economic Research suggests that founders who have had a successful exit in the past have a significantly higher chance of success in future ventures. Key points include:

1. Founders with previous exits are more likely to IPO.

2. Past success often correlates with higher revenue growth in new ventures.

3. Previously successful founders are far more likely to succeed than first-time founders or those who previously failed.

While these findings are compelling, they focus on the U.S. market. Our analysis looks at the European startup ecosystem over the past decade to find more recent and region-specific insights.

European Unicorns and Repeat Founders

Our deep dive into European unicorns uncovered striking data:

• Over half of European unicorns were founded by repeat founders who had previously started at least one company.

• More than one-third of these unicorns were led by founders who had either raised $20M+ in a prior venture or successfully exited it.

This clear trend demonstrates the strong impact of experience and past success in the unicorn club. But we didn't stop there.

Insights from European Startups (2011-2018)

To further understand this dynamic, we analyzed all startups founded in Europe between 2011 and 2018. Here’s what we found from the data:

^{1) This research uses funding since it is a reliable proxy for valuation, as company valuations are typically confidential and not publicly disclosed. 2) Pre-2011 data has significant gaps on failed startups, so we excluded it; the trend remains consistent, likely even stronger due to missing data on failures. 3) Post-2018 lacks sufficient time to judge outcomes.}

• Repeat successful founders (those who had raised $20M+ for their previous venture) had a 25x higher success rate in raising $20M+ for their new startups than newcomers or those with prior failures. Specifically, over 30% of repeat proven founders reached this milestone, compared to just ~1% of others.

• The gap only widened at higher funding levels:

  • over 18% of repeat proven founders managed to raise $50M+ in their new ventures, compared to just ~0.5% of newcomers.

  • When aiming for $100M+, the difference is even starker, with 10%+ of repeat successful founders succeeding versus just 0.3% of others.