Top-tier VCs see circa 2000 startups for one investment. That’s their so-called hit-fit ratio.
It’s not only risk-averse behavior; it’s a matter of sound decision-making.
We reckon it’s less clear-cut for enterprises that are seeking startups for collaborations.
Let’s review the following two cases.
If you seek startups to buy from, the engagement format is most likely transactional. And the search theme: Find what you’re looking for.
Typically, you can define the search domain and match criteria. Expectedly, you will be able to locate the right startups in a short time. The hit-fit ratio can be as small as 5:1.
However, if you seek startups to co-create new opportunities, the engagement format is most probably relational. It is not uncommon that you don’t know what to look for.
Thus, you will have to review and meet dozens of startups to find the best fitting. The hit-fit ratio can be as large as 100:1 or even more.
The lesson to be learned?
Do you want to increase the odds of finding fitting startups? Choose the right scouting approach and keep the hit-fit ratio in your mind.
What do you think?
How many startups should you see for a great catch?
As startups become in greater demand, companies will have to compete for their interest. How to lead the pack?