Using data to pick the optimal start-up name? Whatever you do, don’t pick a name that starts with the letter J. Or K. Or Q. Instead, favor names beginning with T, O and A.

Using data to pick the optimal start-up name?

February 7, 2014: 5:04 PM ET

When analyzing data, be careful not to confuse correlation for causation.

By Tomasz Tunguz, contributor

FORTUNE — Naming your startup can be one of the hardest things to do when starting a company. Each founder must agree. The domain must be available to buy. Lastly, and perhaps most importantly, investors need to like it because the first letter of startup’s name has meaningful impact on how easily the company will be able to raise money.

Whatever you do, don’t pick a name that starts with the letter J. Or K. Or Q. Instead, favor names beginning with T, O and A.

Below is a chart showing the share of capital raised by startups broken down by the first letter of their names for Series A rounds of IT companies in 2013. The data is normalized for the number of startups with each letter-name. Startups with T-names raise 100% more capital during the Series A than the average startup. Startups with the letter A garner 50% larger investments. On the other hand, founders who mistakenly chose J-words raised 50% less capital in 2013, quite a disadvantage in the market.

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The data clearly proves picking the right letter for a startup’s name is correlated to the amount of money the company will raise in its Series A.

But here’s the trick: the relationship isn’t causal, just correlated. So all that advice about picking the right letter… well, it’s useless.

What’s in a name, after all? Looker by any other name would still analyze data elegantly (disclaimer: yes, it’s one of my portfolio companies).

Thanks to @milesgrimshaw who inspired this reminder not to believe everything you read, even if there’s seemingly cohoret data to support the argument.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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