“Investor Readiness”: Summer 2020 Research on 649 Startup Founders from 55 Countries Reveals…

Aery Advisors
4 min readSep 28, 2020

Between June 29th and September 21st, 2020, a total of 649 individuals from 55 countries who self-identify as a startup founder or business owner completed the Aery Advisors “Investor Readiness Test”. This straightforward yet comprehensive test includes 17 questions, nine of which are multiple choice and eight of which are open-ended. The purpose of this test is to assess how “ready” the individual and his or her startup idea or venture is to engage in the process of raising funding from third-party sources. This article will illustrate the aggregate data compiled from our test respondents during the test period.

Type of Venture — Tech or Traditional Business

As illustrated by the graph, 65% of respondents indicated that they work for a tech start-up and 35% work for a traditional business start-up.

Respondent’s Role

We targeted our marketing for test respondents to startup founders and business owners and, accordingly, it is no surprise that almost 89% of our respondents self-identified as a founder of their respective startup or business.

Capital Raised from Third Parties To Date

The test asked respondents to disclose the aggregate capital that their venture or business has already raised from third-party sources in any form (including, equity, debt, grants, crowdfunding and the like). Approximately 57% of respondents disclosed that they have not raised any funding from third parties yet. By comparison, approximately 7% of respondents disclosed that they have already raised more than US$ 1 Million. 36% of respondents had already raised some capital from third-party sources, but less than US$ 1 Million. Put another way, 43% of respondents reported that they have already achieved some success in the venture finance arena.

Current “Runway”

In the startup world, the term “runway” means the amount of time until a startup runs out of cash (assuming current income and expenses remain constant). It is calculated by dividing the current cash position by the current “burn rate” to determine the remaining time left before insolvency. Among those who took our investor readiness test, approximately one-third of respondents disclosed that they had less than six weeks “runway”. And approximately 18% and 14% of respondents have less than three months or six months runway, respectively.

Raising capital from third parties is almost always difficult, especially at the pre-seed stage. If an entrepreneur does not have a prior track record orchestrating a successful exit or two, and a close network of qualified investors ready and eager to fund new deals, raising capital can be especially hard and extremely time-consuming. A general rule of thumb is that it takes at least three to six months to successfully close a financing round. In light of that, the alarm bells should be ringing loudly among at least 64% of our respondents: unless these respondents increase income, reduce expenses or raise capital, they will become insolvent in less than six months.

For post-seed stage ventures, other industry studies among VC-backed companies have shown that the median time between funding rounds is approximately 22 months from Seed to Series A; 24 months from Series A to Series B, and 27 months from Series B to Series C. Accordingly, even though more than one-fourth of respondents in our study believe they have enough cash to fund operations at current levels for more than a year, they should not allow themselves to become complacent as it would be wise to plan to raise at least two years runway (while still hitting milestones) in order to maximize the probably getting additional funding at a later stage.

Stage of Development


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