What makes a successful business successful? Every management consultant and startup founder and financial analyst can tell you, and they’ll all tell you something different. Service leadership! Culture of innovation! Diverse workforce, sound business fundamentals, the quality of the snacks in the break room — who knows?

Now, in the biggest undertaking of its kind, a bunch of economists have compiled a comprehensive database of the origins and fates of 50 million American companies. Which ones, they wanted to know, became the largest employers in their industries? Which ones succeeded?

The team’s leader, John Haltiwanger, is an economist at the University of Maryland who studies “dynamism.” That means he seeks to understand changes over time — why some things surge while other things flame out. He and his team looked at the lifespan of American companies founded from 1981 to 2022. They examined an impressive range of factors: owner demographics, management structure, startup financing, profitability, even the aspirations of the founders. It’s nothing less than a complete accounting of what turns a business into a behemoth — “the best database in town,” as Haltiwanger puts it.

So, O great and powerful database, what makes the numbers go up and to the right? What makes a company successful?

The answer — you will be shocked to hear — is money.

The strongest correlation between business success and the factors Haltiwanger analyzed is how much financing a company is able to raise before it launches. Starting with $1 million boosts the probability of success by a whopping 25 percentage points. It’s like the old Steve Martin joke: Here’s how to become a millionaire: First, get a million dollars.

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