Simpler is better- This is how your startup’s name affects your success
Finding a name for a startup is often an agonizing task. There are plenty of blog posts that help choose a good name for a startup such as 12 Tips For Naming Your Startup, Do startup names matter, and What should one consider while naming a startup? (Quora). There are also tons of free tools to help generate, test, and register startups names.
While there are many factors that go into choosing a name, I believe one of the most important ones is to keep the name short and easy to pronounce. Obviously there are many exceptions to this rule, but I always felt like many of the better startups tend to have simple names. So I decided to run a short analysis to check the correlation between a startup’s name and the chances of success. Here are the results.
Let’s first look at the names of the 107 US-based unicorns (startups valued at $1 billion or more) and compare them to the average startup name (~1000 US-based startups which raised Series A or B this year). As can be seen in the chart below, unicorns tend to have shorter names. In general, the median unicorn name is 8 characters long while the median startup name is 10 characters long.
But even more important than a short name, is having less syllables in the name:
If there is a true correlation between a simple name and the likelihood of success, it should be explained by the benefits of having an easier to pronounce, and likely more memorable name. But there might be something else here. I think there is some kind of self-selection too: Founders who pick short names tend to be more confident than the ones who don’t. They are less worried about being able to buy domains for cheap, or having a name that exactly explains what the product does, or many other factors that often lead to choosing longer names. If this hypothesis is true then startups with simpler, shorter names should be more likely to succeed in the first place regardless of their name.
To test this hypothesis I decided to look at the quality of early investors as a proxy for the likelihood of success. The charts below compares the names of the most recent 100 US-based startups that raised money from a top-10 VC (as defined by CBInsights’ VC power rankings) with those that raised from the other investors*. Again, shorter names tend to be correlated with raising money from better VCs:
And the number of syllables is even more significantly correlated to attracting a top tier VCs. Almost 50% of the startups that raised from a top 10 VC had less than two syllables in their name versus 30.2% of the other startups! And perhaps more surprising- companies with long and complex names (more than five syllables) were much less likaely to raise capital from a top-10 fund!
Obviously, this doesn’t mean that all startups’ names should be short and simple. But it seems like there is a relatively good correlation between a simple, easy to pronounce name and likelihood of success. It’s worth taking into account when you chose your startup’s name.
* The latest 225 Series A and Series B financing rounds where the lead investor was not one of the top 10 in the list.