To be awarded doesn’t mean to be successful.

I don’t know anymore when and who mentioned an interesting indication about startups. But one of my colleagues made a clear statement:

• „The startups with the most awards have the highest probability to fail!“

We can put this statement even the other way around:

• “A startup award is no indication for a successful business case.”
• “A startup without any awards can be very successful.”

It might have been just a gut feeling but he was right.  We double-checked our portfolio companies and other startups and we came to the same result. Only a few of our successful startups have ever attended a startup award. None of the successful startups have ever collected various startup awards.

That’s why:
Successful startups are focusing on product development, on customers, on business development and they are allocating their resources (time and management attention) onto the relevant issues.

Don’t get me wrong – I appreciate the efforts of all associations, the government, etc. to give young entrepreneurs attention and a stage in order to raise money much easier. Please carry on!

But – some of these awards have to improve the selection process. The latest bad example was the “Gründerwettbewerb” of the German Department of Trade and Industry (BMWi) during the Cebit 2009.

I had the honor to share some insights of the startup and venture capital industry in German, impacts of the recession and some of my experiences. Later on I was sitting in the audience to follow the award. I don’t know how many startups have been awarded, but the fact that 95% of these business cases won’t get venture capital made me thoughtful. Most of the business cases were copy cats of already existing cases, some of them were trying to solve problems which already have been solved and some others haven’t thought about if there is a reasonable market potential.

Here comes my recommendation:
Please put experienced people (successful entrepreneurs, business angels and venture capitalists) into the jury.  People who have seen it and done it! (no politicians, no consultants, no state officials, no “old” managers from large corporations)

The results will be:

• Promising business cases with awards
• Increased relevance and attention of those awards in the venture capital industry
• Less participating companies but with a much higher quality