“Luck is not something you can mention in the presence of self-made men” – E.B. White

Approximately half a million new businesses are started every year. It is unclear the percentage of these that seek venture money. However, the number of new companies that receive venture funding each year is roughly a thousand, or 0.2%. However way you slice it, getting venture funding constitutes a very lucky break. Well deserved in some cases, pure luck in others and I don't think any VC will tell you they can confidently separate the two. Returns of venture as an asset class support that belief.  Regardless, luck or deservedness, once you are a VC-backed startup, you enter a rarefied group.

And in some ways, it does feel a little bit like winning the proverbial lottery (although, not having won the lottery, I’m only imagining what that must feel like). It does feel like going from the startup version of owning a rusty Yugo to having the budget to afford (at a minimum) a fleet of new Toyotas. Consider the evidence.

“Luck is the residue of design” – John Milton

Prior to funding, we relied almost entirely on unpaid interns. They were fantastic but nonetheless unpaid because I didn't have the money to pay myself let alone other people.  Now, for the first time, we can actually afford to pay not only the interns who work for us but we have a budget with which to hire a team. It feels luxurious beyond belief.

“Luck is not chance – it’s toil. Fortune’s expensive smile is earned” –Emily Dickinson

Prior to funding, I shared an apartment with my co-founder so it could double as our office and we could save on rent.  People gasped. “You work AND live together? Doesn't that get to be a bit much?”. That wasn't even factoring in that my 8-year-old lived with us too. Yes, it was a full house, and yes, it was a bit much. But we didn't really have a choice. Now, we can afford to have our own living spaces and an office. [This practice is not uncommon in startup world. I know several HBS entrepreneurs who lived with their co-founders, and one of them had a spouse in the equation].

Prior to funding, we had limited mentorship. Now, a well-respected engineer, complete with avuncular white beard, not only vets technical talent for us but also sources it! Let me repeat: he tries to get top developers to come work for us. If hiring a CTO is like finding your future wife as an Alaskan offshore man, we went from a post on Craigslist’s “Casual Encounters” section to starring in “The Bachelor”.

“Shallow men believe in luck… Strong men believe in cause and effect” – Ralph Waldo Emerson

However, before assuming that winning the startup jackpot is like playing the slots machine, consider this. Entrepreneurship is glamorized these days and that masks, glosses over and ignores the incredible amount of hard work and perseverance that it takes to get into a lucky position. Stories of companies securing funding or a first client sound similar to bands encountering “overnight success”: there is a chasm between sound bite and reality.

“Luck affects everything; let your hook always be cast; in the stream where you least expect it, there will be a fish” – Ovid

Prior to launching Pymetrics, I spent 6 months making a bi-monthly trip from Boston to NYC to participate in a fellowship program called the Startup Leadership Program. To do this, I first had to convince a skeptical NYC SLP chapter leader: “Why do you want to participate in SLP NYC when we have one in Boston? Brooklynites have spotty attendance…” He had a point. I was in my second year at HBS so making this bi-monthly pilgrimage would require the following 24-hour schedule: rushing from class to catch the Tuesday noon BOS-NYC Bolt Bus, arriving to SLP class just in time (and sometimes late), getting to a friend’s house past 10pm, sleeping on his couch, waking up at 5am to catch an 8am JetBlue flight to make my 10am Wednesday morning class at HBS. Every other week for 6 months mostly during winter months. It did sound crazy, not to mention expensive. But I did it because I wanted to develop relationships in NYC. On one of these trips, I met the chairman of a healthcare company. This led, though a third party, to meeting the hedge fund manager whose firm would become our first client. Without that client and revenue, we would have never managed to bootstrap for a year.

“Luck is what happens when preparation meets opportunity” -Seneca

Funding sound bite versus reality. Sound bite: The VC firm was a case study at HBS, I liked the firm / VC protagonist, I emailed the VC, he responded, and after one meeting, he offered to fund us. Reality: It was 18 months of bootstrapping, product and client development between the case study and the meeting. The VC would never have taken us seriously without 18 months’ proof of product, clients and revenue. Despite traction, I had to ignore my HBS professor’s protestations that “Frida, this firm doesn't invest in companies like yours” and grovel / insist that he fork over the VC’s email address. And, despite having revenue, product and clients, this was the email that was answered out of the hundreds of promising introductions, meetings, or emails that (ultimately) went nowhere.

“Luck is believing you are lucky” – Tennessee Williams

The flip side of this, of course, is that we gave up autonomy, freedom and equity to get these resources. And I have no doubt that, at times, we will chafe at the new influence and long for the good old days of cohabitation, free interns, and developers sourced from Craigslist. We will romanticize and think, “Remember when we were [not] young and free [and broke?]”. All I hope is that during those times, we can remember the feeling we had when all of sudden we could source and hire amazing talent, as well as not share bathroom towels.

The remaining stats: of every 100 ventures financed, 40 are write-offs, 40 are in the middle, and 20 are winners. So our next task, at a minimum, should be to avoid falling in the bottom 40%. However, even if we fall in the 40% of companies that VCs regret investing in and want to usher out the door as fast as possible, I will still consider us lucky.