The Entrepreneurship Lottery by Scott Shane
The 83 percent of companies that have less than $500,000 in sales at age six account for only 4 percent of the value of the cohort of companies. By contrast, the 1.6 percent of the companies that had sales of $5,000,000 or more accounted for 54.2 percent of the value of the cohort. In fact, just the 175 companies that had reached $100,000,000 in sales or more in year six accounted for 14.5 percent of the value of the 1996 cohort of start-ups.
Generating significant financial value is something done by a very small percentage of start-ups, but a handful that do generate a lot of value.
Scott Shane is a Professor of Entrepreneurial Studies at Case Western Reserve University
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