MIT Researchers: Here's Where To Look For The Next Amazon Or Facebook

A team of researchers at MIT believe they have pinpointed several key traits that could help policymakers and investors identify the next Amazon.com, Inc. AMZN, Alphabet Inc GOOGL GOOG or Facebook Inc FB. According to the researchers, not all tech startups are created equal, and recognizing and supporting those that are most likely to succeed could be a benefit to the entire economy.

In the past, policymakers have considered supporting tech startups to be simply a numbers game. For every Amazon that drives massive economic and employment growth, there are thousands of startups that fall by the wayside. Local and national policymakers have taken a “shots on goal” approach to supporting entrepreneurship. Essentially, they believed the best way to find the next Facebook was to encourage as many startups as possible.

“Those policies can certainly be helpful, but what that’s doing is it’s not differentiating firms based on their aspirations… It’s asking too much from the vast, vast majority of firms who don’t really have the aspiration or the potential to create growth,” Catherine Fazio, director of the Laboratory for Innovation Science and Policy at MIT explained.

Want more fintech? Sponsor or attend the 2016 Benzinga Fintech Awards, and meet the industry's top executives and influencers. 

Winning Traits

Instead, MIT researchers have identified several common traits that many of the most transformative startups possess:

• Their names are shorter and tend not to contain the founder’s name.
• They tend to be established as corporations rather than LLCs.
• They are often incorporated in locations with business-friendly regulations, like Delaware.
• They often apply for patents very early on in their development.

Identifying the next transformative tech startup will always be a difficult task, but by narrowing down the likely field of candidates, more support, funding and focus can be placed on those companies with the highest potential impact on the economy in the long-term. Researchers are hoping that these discoveries can help ensure that the next Amazon doesn’t fall through the cracks before it ever gets the chance to change the world.

Disclosure: The author holds no position in the stocks mentioned.

Image Credit: Public Domain