Determinants of Successful Startups

Abstract This paper examines the impact of financial and marketing parameters on the success of a startup with the help of empirical research and case analysis. In the study, the success of a startup is taken as the fact of raising funds at the amount of three annual revenues of the enterprise. The sample consists of 83 startups: representatives of different countries, spheres, size of the enterprise etc. The study considers three hypotheses: H1: LTV: CAC ratio (life time value to customer acquisition cost – indicates how much a startup should spend on attracting a new consumer) has a direct effect on the success of the startup; H2: Gross churn rate (displays the turnover of users/consumers for a certain period in relation to the total number of consumers at the beginning of the period) inversely affects the success of the startup; H3: the number of employees of the startup also inversely affects the success of the startup. The econometric methodology of the study contains lasso regressions, logit models, and pair regressions.