Friday, June 18, 2010

interesting stats on the "startup ecosystem"

Where and How do Startups Work?

There was a great article in the Business Insider earlier this week about the Startup Eco-System. This comprehensive overview looks at startups from a variety of perspectives including break-down by industry, revenue model, fundraising strategy and location.

Not surprisingly, the stats about the employment landscape and how startups work caught our eye.

Get this:

80 percent of start-ups have seven or fewer employees.
Of course, you have to wonder whether "employee" is being used in the sense of full time help, and if so, how do these numbers change if you start including contractors, part-time people and interns. We spoke with a company just yesterday that counts itself at 22 people of which 12 are interns and freelancers. Where would this land on the chart? We’re not sure.

Close to 45 percent of startups in both NYC and Palo Alto are run out of people’s homes.(And yes, we’re aware that there are many hotbeds of startup activity between the two coasts, but hey, we didn’t create this report—we’re just reading it.) If this stat doesn’t scream a reliance of virtual resources, we don’t know what does.

And given this next stat, home offices sure do look attractive. The average rent per month per employee in NYC is $733, followed by $475 in Palo Alto and $500 in Boston. Again, virtual workforces are looking mighty attractive when looking at those numbers.

The good news: 42 percent of startup companies with commercial office space in NYC do not pay rent, followed by 22 percent in Palo Alto and 24 percent in Boston.Are they squatters? No. This is thanks to incubators providing free space and those business owners that are paying it forward to their friends and giving a free space to set up shop.

Fascinating stuff, and definitely hits on some of the challenges and costs that entrepreneurs face as they encounter periods of growth.

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