It’s been said that 9 out of 10 new businesses will fail. The facts are there to prove it, but should that scare you?
The biggest brands today once existed as ideas in the minds of individuals and you’re not any different. You are probably now considering starting your own business around your brilliant idea. Who knows, with the right vision and execution, your startup could become the next billion-dollar brand.
Around the world, startups are driving innovation and contributing to the rapid growth of economies. These new businesses are springing up nonstop with new inventions in the form of products and services year after year. Some of such game-changing business ideas prove that entrepreneurs possess the willpower to move the world.
While many startups have beautiful success stories, it isn’t always like that for every business. Although the winning startups tend to make the news more often, that doesn’t give a clear picture of what it’s like for many new brands. Knowing all the facts about the startup industry, including the good, the bad and the ugly, will give you a more balanced view and the right perspective on which to build your business.
That said, we’ve put together a roundup of important stats, trends and facts. We’ve laid the numbers out to ensure you have a broader grasp of the startup sphere. Let’s get started.
Some Interesting Startup Statistics
- The idea of Independence and becoming their own boss is what compelled 55% of entrepreneurs to set up their own business.
- Among all new startups, 9 out of 10 eventually fail.
- The startup with the highest value is Bytedance at $320 billion. (Yahoo Finance)
- In the United Kingdom, 65% of adults contemplated starting up a business in 2020.
- San Francisco ranks as the world’s best city for startups.
- 475 unicorn companies were in operation by 2020.
- Entrepreneurs who run incorporated businesses in the US have a median salary of $50,347.
- In the US, 1 out of every 3 small businesses have a starting capital lower than $5000
The statistics above sound quite interesting, right? There’s more!
In the following sections, we’ll go into detail by providing more startup numbers for 2022 pulled from solid research. We’ve grouped them into categories as follows:
- Global startup statistics
- Startup funding statistics
- Startup costs statistics
- Startup statistics by region
- Startup statistics by workplace
- Startup statistics by demographics
- Startup statistics by Industry
- Startup problems and failure rates
Global Startup Statistics
- 1000 unicorns and 53 Decacorn startups exist around the world as of March, 2022. (CBI)
- Around 5.4 million new business applications were filed in 2021. (EIG)
- From 2017 to the second quarter of 2019, the startup industry around the globe had a valuation of $3 trillion. (Startup Genome)
- The city with the best ecosystem for startups in 2022 is San Francisco. (JumpstartMag)
- It’s estimated that, by 2025, smart city startups in Asia will create 45% of the global revenue stream. (Statista)
- B2B companies made up 61% of the startups in 2020, while 39% went to B2C companies. (Statista)
Startup Funding Statistics
- Three-fourths of new business financing comes from lines of credit, credit cards and business loans. (SBA)
- Over $24 billion in funding goes to artificial intelligence startups every year. (Statista)
- In January, 2021, global startup funding increased by $8 billion. (Tech Crunch)
- The startup with the highest value is Bytedance at $320 billion.
- In 2020, startup investments by venture capitalists were pegged at $156 billion. (Tech Crunch)
- Educational technology ranked as the best startup industry in 2021. (Geo Motiv)
- Over 1,000 proposals are received by venture capitalists every year, with more interest shown in businesses that need at least $250,000 in investment funds. (Money Crashers)
- The NSBA attributes limited business growth in 75% of startups to their inability to access required funding. (Fundera)
- 1 out of every 3 startups has a starting capital lower than $5000. (Smallbiztrends)
- Only 1% of startups eventually grow to become unicorns like Docker, Stripe, Airbnb and Uber. (CBI)
Startup Costs Statistics
- Manufacturing companies, medical offices and restaurants rank as the businesses with the highest startup capital, requiring over $100,000. (Smallbiztrends)
- Reports show that there is no outstanding debt for 21% of small and medium-sized businesses. (Statista)
- On average, $300,500 is required for 5 startup employees, making payroll costs one of the most expensive in the US. (SmartAsset)
- Startups have to spend between $10,000 and $125,000 in equipment costs. (Fundera)
- Health insurance poses a significant problem preventing new businesses and startups from surviving. (NSBA)
- In 2018, personal funds were the most popular method of finance for new businesses, making up 77% of startup finance costs. (Lendio)
- To grow and become very successful, big unicorns like Uber and Airbnb incurred debts of $1 billion and more. (PitchBook)
- The outstanding debt margins for SMEs in the US were somewhere between $50,000 and $100,000 for 14% of startups. (Statista)
Startup Statistics by Region
- The United Kingdom is the best country in the world to set up a new business as of 2021. (Digital)
- The United States is the headquarters of 46% of unicorns around the world. (Hurun)
- San Francisco currently ranks the highest among the best cities for startups. (StartupBlink)
- India recognizes more than 14,000 new startups. (The Economic Times)
- North American and Asian companies account for nearly 90% of the entire market valuation of unicorns around the world. (Statista)
- Unicorns in the Asia-Pacific region have the highest market valuation, followed by the US. (Statista)
- No unicorns come from Russia, despite the country having the largest GDP when compared to other countries that produced unicorns. (StartupBlink)
- No other country ranks as high as the United States in the number of startups created. (StartupBlink)
- More than 9,000 tech startups operate out of New York City. (Tech: NYC)
- In the Americas, Panama had the most number of people involved in business startups in 2020. Its early-stage entrepreneurial activity rate was 32.4%, (Statista)
Startup Statistics by Workplace
- Startup businesses created more than 3 million new jobs in 2020. (Statista)
- In the United States, more than 99% of businesses have less than 500 employees, making them qualify as small businesses. (SBA)
- Startups have an average hire rate of 6 months per person on average. (Forbes)
- Most small businesses in America need employees, and 54% are hiring. (National Federation of Independent Business)
- Startups with 11 to 50 employees have a higher risk of failing. (Failory)
- Teams made up of individuals with extensive previous experience but average collective vision have low levels of passion. (Harvard Business Review)
- Tasks like payroll, HR duties, hiring, etc., which do not generate revenue, take up as much as 40% of the working hours of startup owners. (Entrepreneur)
- Startup employees have a medium job tenure of two years. (Carta)
- More than half of small businesses have a CFO. (Wall Street Journal)
Startup Statistics by Demographic
- Although there’s no age limit to becoming a business leader, new business founders are 42 years old on average. (HBR)
- Startups have a higher chance of succeeding under a sixty-year-old founder than a thirty-year-old one. (Inc.)
- In 2020, Stanford University produced the most number of startup founders. (Statista)
- More than 9 million businesses have female founders in the US. (Finances Online)
- 25% of startups in the United States are owned by immigrant entrepreneurs, which represents an increase when compared to the figures in 1996. (Forbes)
- Caucasians own 71% of startups in the US. (Smallbiztrends)
- In the United States, over 14 million businesses have male founders. (Finances Online)
- 36% of small businesses are owned by women. (Legal Jobs)
- $3.1 billion in venture funding was raised by Latinx and Black women founders. (Digital Undivided)
- Females tend to start more businesses in the medicine and wellness industry among other sectors. (500 Startups)
- In India, females make up only 9% of new business founders. (Statista)
- 95% of small business owners have a bachelor’s degree. (Kauffman Foundation)
- 70% of new businesses are launched from home. (Smallbiztrends)
- Startups with female founders perform 63% better than companies where the founding team comprises males only. (First Round Capital)
- In 2018, of the 21 co-founded startups in the United States that raked in $20+ million in yearly income, 9 were run by co-founding teams comprising females only. (Medium)
- Only 1% of startups funded by venture capitalists are owned by black founders. (BLCK VC)
Startup Statistics by Industry
- There are more unicorns in the FinTech industry than in any other industry around the world. (Hurun)
- Startups in the blockchain and cryptocurrency industry raised nearly $3.9 billion in funding from venture capitalists by the third quarter of 2018. (Diar)
- The tech startup in the US with the most investments from venture capitalists is JUUL Labs (CBI)
- Around 80% of financial institutions have partnered with fintech. (McKinsey)
- There was an increase in the flow of investments into blockchain and cryptocurrency startups in 2018 by $1+ million. (Coindesk)
- 75% of startups financed by venture capitalists fail to pay their investors back. (Failory)
- From 2015 to 2020, the healthcare sector saw an 835% increase in equity funding for artificial intelligence. (Statista)
- On average, new businesses in the cannabis industry are able to raise $1.8 million from seed investors. (TechCrunch)
- When it comes to areas like personal loans, money transfers and payments, 88% of legacy banking institutions are scared that they will lose revenue to fintech companies. (PWC)
Startup Problems and Failure Rates
- Nine out of every ten startups fail. (Fortune)
- In Latin America, 75% of new companies go out of business after 24 months. (PanamericanWorld)
- Around 23% of European startups have a problem with sales and customer acquisition as one of their leading struggles. Another 20% cited competition as the biggest threat to their survival. Other threats like the inability to raise capital, bureaucracy, domestic regulation and rapid changes in the market condition accounted for 13% each. (PWC)
- In the UK, US and Canada, 50% of startups say that the biggest issue affecting the business is difficulty in finding skilled talent. (Silicon Valley Bank)
- Seventy-Five percent of startups backed by venture capitalists fail. (The Wall Street Journal)
- More than 50% of startups do not survive up to 5 years. (igostartup)
- The information industry experience is the highest rate of startup failures and it’s currently pegged at 63%. (Failory)
- Low starting capital is one characteristic of 79% of startups that have failed. (Preferred CFO)
- The absence of product-market fit is the reason why 34% of startups have failed. Product-market fit is very crucial and is considered a necessity for new businesses to thrive. (Failory)
- Most new businesses are not profitable as only 40% of startups report profits. (Zippia)
- Challenges with cash flow is the reason why 82% of new businesses fail. (Fundera)
- Among other reasons why startups fail, 29% can be traced to situations where a new business runs out of personal money and funding. (CBI)
You Can Win with Your Startup
Remember, an idea in the mind of a driven individual was all it took to start some of the biggest companies in the world today like Amazon, Google, Meta, Apple, and many more. Right now, thousands of new businesses are springing up in every corner of the world. The goal is to impact different industries like banking, finance, healthcare, tech, real estate, etc., in order to improve the quality of human lives.
If we are to go by the facts and stats, knowing that, many startups will fail along the way. But, some will survive and eventually become thriving companies worth billions of dollars.
In order for that to happen to you, you need to get a lot of things right, some of which include timing, market discovery and the product/service. These factors come together to create a brilliant venture that investors will find attractive enough to throw their weight behind.
The statistics might look scary. You might even be doubting yourself right now. But don’t let it keep you from putting your best foot forward and launching your business. Let these stats and facts help you maintain a balanced view of your expectations and, who knows, you could become the next unicorn.