18 months ago, I launched AMOS — proprietary IP that predicts how likely any given startup is to Exit (be acquired or go public at terms favorable to venture capital - VC - investors).
I left the VC game full-time and was jaded by the market nonsense tied to investing in early-stage companies.
I’d seen dozens of terrible startups get funded, hundreds of entrepreneurs not knowing what they were in for, and flocks of people with disposable income taking a shot at venture investing.
My goal was “Moneyball for all” — I wanted to shed some objectivity and rationality to investment decisions based on advanced statistical models and historical data for nearly 100,000 startups.
Now, I am so excited to share updates from AMOS’s first longitudinal design study.
BACKGROUND / STUDY DESIGN
When AMOS launched in January 2019, I picked 41 startups to track over an extended period of time to either confirm or reject AMOS’s validity and accuracy.
All 41 startups were put through AMOS shortly after they secured funding in Q1 2019.
Some of the 41 were big names, and some were small names. The 41 startups spanned all types of industries — from Software to Hair Products to Livestock — and were at various stages of company maturity — Seed to Series H.
DEFINITIONS
After running all 41 startups through AMOS, the results were bucketed into 3 categories:
Startups that AMOS LOVED (Total of 5)
Definition: 30% Exit Probability or Greater.
Guidance: Worth the risk; strongly consider making the investment.
Startups that AMOS gave REASONABLE ODDS (Total of 27)
Definition: Exit Probability greater than 8% but less than 30%
Guidance: Worth the due diligence and investment consideration if the startup is in an industry that you know well.
Startups that AMOS said to AVOID (Total of 9)
Definition: Exit Probability below 8%.
Guidance: Don’t buy the hype and don’t invest; if the startup is a brand new company, wait for it to meet milestones before considering due diligence.
AMOS ANALYZED & TRACKED 41 STARTUPS
RESULTS
Of the 5 startups that AMOS LOVED in Q1 2019:
2 have Exited (Honey & Performance Livestock Analytics)
2 are still in business (Knock & Whatfix)
1 died (Omni)
Had a fund invested in AMOS’s Top 5 startups in early 2019, that fund would already have a 40% exit rate.
“Would you take a 40% exit rate on your venture portfolio?”
Note: Whatfix successfully closed its Series C round of $32M in Feb 2020.
A second note: The Top 3 from Q1 2019 — 2 exited and one died.
Honey: 35.2% likely to Exit (acquired January 2020)
Omni: 33.6% likely to Exit (died)
Performance Livestock Analytics: 33.5% likely to Exit (acquired April 2020)
Had a fund invested in AMOS’s Top 3 startups in early 2019, that fund would already have a 67% exit rate.
“Would you take a 67% exit rate on your venture capital portfolio?”
Of the 9 startups that AMOS said to AVOID in Q1 2019:
1 filed for bankruptcy (Proteus Digital Health)
1 laid off 30% of its workforce (Bird)
1 died (Brandless)
Zero meaningful Exits to-date… 1 was acquired for less than the amount it raised (ZappRx)
5 are still in business
“AMOS made the right call to avoid popular, well-funded startups such as Proteus Digital Health, Bird and Brandless.”
Of the remaining 27 startups that AMOS gave REASONABLE ODDS in Q1 2019:
5 Exits
5 died
1 lost 80% of its company value in less than 12 months (We Work)
16 are still in business
“OK, so if AMOS is so great, then why did it whiff on Omni — a startup that AMOS loved?”
Great question.
Omni had an Exit Likelihood of 33.6%. This is a great score for an early stage company, but be mindful that Omni still had a greater chance of not exiting than exiting. A high AMOS score does not guarantee startup success.
Any investment comes with risk, and startups are especially high-risk. I strongly encourage all who are considering an investment of any kind to perform due diligence and character assessment of the people operating the investment.
Where AMOS users have a total advantage, is by knowing what the odds are that any given startup will exit based on historical and advanced statistical data proven to be directionally accurate.
FULL RESULTS FOR THE 41 STARTUPS
AS OF JULY 2020
