Startup Funding via Lottery Ticket Purchase

Very funny piece here in Kitchen 2.0 about having more chance of getting funding via lottery ticket than VC money (tip of hat to JamesCoops). To quote:

You do realise that there was more major lottery winners in the UK in the first half of 2007 than Web 2.0 VC deals. In fact right now there are 17 unclaimed lottery winners, it could be you, totalling over £11 million which funnily enough equals what VC’s invested in the UK - $22 million invested.

The moral of this tail, bootstrap into profit, play the lottery, check your not on the unclaimed prize list, get into profit, build revenue to over $1 million and when the VC’s come calling move office and don’t tell them.

Of course, here at Broadsight we are deeply analytical and so decided to give this a quick run through.

We will assume that on average it takes 60 man days of work to get funding, which at a fully loaded cost of say £72,000 pa is c £12,000*

And you don't have to give away any equity, so lets assume a 50% bonus for that ie its a £18,000 spend

There are c 60 million tickets sold every week, at a price of £1 each. Thus, buying 18,000 tickets one week means the probability of getting funded via Lottery is c 3000:1

What we don't know, is what the ratio of hopeful entrepreneurs to funded ones is.......but it needs to be an order of magnitude lower or I can see OpenCoffee dissolving into a Lotto Line

Update - just read Allen Stern's post on Facebook being a higher probability than winning the lottery. llen notes there are 70 apps worth more than $1m. I don't know how many putative Facebook Apps there are, but if it is more than 21,000 you are better off on the Lottery


* Weekends...pah!