Start-ups: Who really creates value?

Scott Shane provides an interesting analysis at Small Business Trends that only a handful of start-ups create a lot of financial value. He looked at 1996 U.S. Census data and found that “83 percent of companies that have less than $500,000 in sales at age six account for only 4 percent of the value of the cohort of companies. By contrast, the 1.6 percent of the companies that had sales of $5,000,000 or more accounted for 54.2 percent of the value of the cohort. In fact, just the 175 companies that had reached $100,000,000 in sales or more in year six accounted for 14.5 percent of the value of the 1996 cohort of start-ups.”