The research questions

• What factors differentiate a successful venture from a failing one?

• Is it possible to statistically forecast, at the outset of a new business, the likelihood of success or failure, and if so, how might this be done?

 Venture capitalists, angel investors and academic researchers have long known that certain factors are linked to a start-up’s eventual success or failure. Most notably, these factors include a strong and experienced management team, a good match between a product and a given market, and certain psychological aspects that include a healthy appetite for risk and an ability to recognize and exploit new opportunities. But these anecdotal factors have predominantly been studied qualitatively, and not subject to statistical rigour.

The research

TriStart has developed a statistically valid model applicable to start-up and early stage companies that identifies the factors critical to business success.

It is the result of a 6 year research programme that began with a questionnaire derived from the aggregation of numerous research studies and the insights of a team led by Dr. Shai Vyakarnam, Director of the Cambridge University Centre for Entrepreneurial Learning. The genius of the questionnaire was to know the right questions to ask respondents in order to identify the factors that made them successful over time.

Large scale postal and face to face surveys were undertaken to collect data from a cross section of start-up and existing businesses.

The results were analysed by David Dawkins, Fellow of the Royal Statistical Society, using a number of statistical methods including; factor analysis, logistic regression and  interaction to produce the model. His calculations have since been validated by an auditor of the Royal Statistical Society.

In practice the model has proved extremely successful. Analysis has shown that correct classification is made  17 times out 18 for successful companies, and overall only 7% of the data is placed in the wrong pole (success=failure or failure=success).

Experience has also shown that entrepreneurs have found it inherently useful, with the vast majority of users finding the advice it provides extremely useful to them. This valuable, tangible benefit extends to follow-on testing, as individuals are equally keen to know about their progress. Indeed, TriStart has had phenomenal success with requests for follow-on surveys, achieving a remarkable response rate of 95%.