EARLY INDICATORS OF VERY LONG-TERM VENTURE PERFORMANCE: A 20-YEAR PANEL STUDY

This paper discovers early indicators of very long-term performance of high-technology new ventures (HTNVs). We tracked the progress of a sample of 142 HTNVs founded at the Israeli government's Technology Incubator Program in the 1990s through 2001, 2004, 2010, and 2018. The results demonstrate a surprisingly strong effect of early sales traction, signifying the achievement of early product-market fit in an HTNV's earliest years, on long-term (a decade) and very long-term (two decades) survival, and also on survival-at-scale (i.e., relatively high sales levels). In our sample, HTNVs that made sales in each of their earliest years reduced the hazard of closure, over a 20 year period, by around 90% compared with HTNVs who made no sales in their earliest years. It also significantly increased the chances of survival-at-scale among those HTNVs that survived over the long or very long term. In contrast, the effect of early external investment on survival was positive in the short to medium term but then faded over time. We propose an underlying mechanism to explain the surprising finding of distal effects of early product-market fit that builds on imprinting theory, resourcing theory, and the concept of market-based assets.