What comes to mind when you hear the word startup?
If it’s a grungy basem*nt in the heart of Silicon Valley, you’re not alone. A large portion of people think of startups as a team of only five people with one common thread—a high threshold for chaos, but even a five-year-old company can still be considered a startup.
A startup can graduate to a larger company by being acquired, opening more than one office, generating revenues greater than $20 million, or having more than 80 employees, Forbes explains.
These employees work for entrepreneurs who believe their ideas could skyrocket by creating a startup. Well that’s the dream, right? The risky reality when it comes to startups is that they’re vulnerable to risk and likely more than we would imagine. On the bright side, 10% of startups are successful each year and know what it takes to survive the odds of failing.
During the beginning stages of a startup, finding your seed funding is more than half the work. Your initial funding will most likely come from your own pockets and then the goal is to raise outside capital.
To track the latest trends, we’ve compiled small business and startup statistics to better understand what makes a startup tick. If you’re looking to build a startup or just interested in diving into the numbers, check out these informative statistics on success, failure, funding and more before getting started.
01
Startup Statistics and Trends
The average time between funding rounds from Seed to Series A is 22 months, Series A to B is 24 months, and Series B to Series C is 27 months.
Once you get to a Series B or C round, you’ll probably work for 15 to 20 months before bringing in new capital.
In 2018, there were 30.2 million small businesses operating in the U.S.
SBA
Only 2 in 5 startups are profitable, and other startups will either break even (1 in 3) or continue to lose money (1 in 3).
67% of Series A funded startups in 2017 were already generating revenue before being funded.
A 2018 study shows that a 60 year old is 3x as likely to build a successful startup than a 30 year old.
The ratio of men entrepreneurs to women entrepreneurs in 2019 is 10:7.
Global Entrepreneurship Monitor
The time of year you pitch, the detailedness of your data, and the value of your pitch deck are a few of the strongest factors affecting the amount of funding a business receives.
02
Startup Success Rates
Founders of a previously successful business have a 30% chance of success with their next venture.
Skill vs. Luck in Entrepreneurship and VC
82% of successful business owners admit they have the right qualifications and backed up experience to run a company, even with limited cash flow.
Paying attention to your customers is important since 14% of startups fail due to not regarding customers’ needs.
Founders who have failed previously have a 20% chance of success while first time first time founders have an 18% chance of success.
Skill vs. Luck in Entrepreneurship and VC
In 2017, U.S. healthcare startups were the strongest industry, bringing in $36.3 billion in revenue along with Inc. 5000 companies.
03
Startup Failure Rates
Across all industries, startup failure rates seem to be close to the same.
SBA
Failure is most common for startups during years two through five, with 70% falling into this category.
The number one reason why startups fail is due to misreading market demand — this is found in 42% of cases.
The second largest reason why startups fail (29% of cases) is due to running out of funding and personal money.
Other notable cases of failure are a weak founding team (23%) and being beat by competition (19%).
Failure because of competition most likely happens when a startup has been active for three to five years.
Other major reasons for startup failures (at least 10% or above) are from pricing/cost issues, user-unfriendly products, poor marketing, and product mistiming.
04
Startup Funding + Investor Facts
Individual venture capital firms receive more than 1,000 proposals a year and are mostly interested in businesses that require an investment of at least $250,000.
About 1% of startups evolve into a unicorn startup, like Uber, Airbnb, Slack, Stripe, and Docker.
In 2018, male founders brought in $109.36 billion in VC, while female founders only brought in $2.86 billion in VC.
Valued at $75 billion, Bytedance, a Beijing-based news and information content platform, was the top valued startup by venture capital firms worldwide in March 2019.
One in four businesses, surveyed by the NSBA, were not able to receive the funding they required, which led to limiting the growth of their business.
Business loans, credit cards, and lines of credit account for about ¾ of financing for new firms.
SBA
05
Startup Costs Statistics
One of the most expensive startup costs is payroll, averaging around $300,500 for five employees across the U.S. according to data from
The most popular financing method for startups costs in 2018 was personal funds at 77%.
Large unicorn startups, such as Airbnb and Uber, have taken a billion dollars or more in debt in order to become more successful.
With costs being so large and detrimental to a startup’s survival, the median salary for self-employed individuals was $50,347 in 2016.
SBA
Recent research has shown the most expensive small businesses and startups to launch are restaurants, medical offices, and manufacturing companies, needing more than $100,000 to get started.
Startups in accounting, online retail, construction, and landscaping were most likely to get started with under $5,000 in startup costs, shown in recent research.
One of the biggest challenges to the survival of small businesses and startups is the cost of health insurance.
06
A Look at Startup Teams
Startup teams that reported high levels of previous experience but average to low levels of passion and collective vision were overall weaker.
Startup owners can spend around 40% of their working hours on tasks that do not generate income such as hiring, HR tasks, and payroll.
Two founders increase the odds of a startup’s success with 30% more investment, three times the customer growth rate, and a higher likelihood the startup will not scale too fast.
Experience alone does not make a team successful — soft skills such as “entrepreneurial passion” and “shared strategic vision” are required as well.
07
Statistics for FinTech Startups
In the first three quarters of 2018, both blockchain and cryptocurrency-focused startups have raised close to $3.9 billion in venture capital, which is up 280% compared to 2017.
Research has shown that successful fintech startups will focus on data-driven iteration and continuous user testing, rather than using new technology.
In 2018, global venture capital fintech investment reached $30.8 billion, which is an increase of $1.8 billion from 2011.
In 2018, the average investment into cryptocurrency and blockchain increased by over $1 million.
Worldwide, there are more than 12,000 fintech startups and 5,779 in the U.S. This makes the U.S. the most popular place for fintech startups as of August 2018.
The fintech market includes 39 venture capital backed unicorns worth a combined $147.37 billion.
In 2017, blockchain firms saw record levels of VC investment and deal volume, at a record high of $512 million.
Five new fintech unicorns developed in the fourth quarter of 2018 and two additional unicorns in January of 2019.
VC investment into U.S.-based blockchain fintech projects in the first half of 2018 was far greater than all of 2017.
The largest challenge that fintech startups face is the cost of customer acquisition.
08
Statistics for Construction Startups
In North America, construction startups brought in $581.6 million in funding in 2017 compared to $182.7 million in 2013.
The likelihood that a new construction company will last more than five years is 36.4%.
Good news for construction startups, AI technology is estimated to boost profits by 71% for this industry.
Residential housing construction is growing faster than any construction segment, as new business is seen entering this sector.
09
Statistics for Technology Startups
The United States averages 20 technology companies founded per year that reach $100 million in revenues.
Ewing Marion Kauffman Foundation
Tech-based wage growth was higher than over the U.S. wage growth from 2007 to 2016, 20% versus 3%.
There are ten technology-based industries that define a tech-drive startup including: pharmaceutical manufacturers, medical device manufacturers, computer and electronic manufacturers, and semiconductor machinery manufacturers.
Tech-driven ventures offer better pay opportunities, as they pay an average of $102,000 more than double the current U.S. average of $48,000.
10
Statistics for Real Estate Startups
Residential real estate startups using artificial intelligence tools are bringing in the most investments, such as REX ($45 million), Knock ($400 million), and ZIllow ($565 million).
VCs have sunk substantial funds into office sharing startups like Industrious, which raised $62 million in 2017.
The top type of real estate asset that proptech startup CEOs have chosen to pay attention to is commercial property.
A large number of small businesses and startups are beginning to support real estate agents and other professionals within the industry.
Over $13 billion were invested in various proptech companies worldwide In 2017, $13 billion was invested within various worldly proptech companies.
The number of real estate tech deals worldwide has increased consistently each year, amounting to 454 deals as of 2018.
About 31% of commercial real estate investors plan on investing in proptech companies and 26% plan on partnering with protech companies.
11
Future of Startups
Startup founders are leaving the Silicon Valley “bubble” and heading to the East coast.
Unicorns are much more common and trending to be even more common. The rate has increased by 353.1% from 2013 to 2018.
To solve problems across various startup industries, new technology will be implemented.
Recognize that personalized marketing will become important to the success of your startup.
2019 is the year where startups will turn heavily towards technology to assist with keeping up with their books and avoiding financial distresses.
Rob Rosenblatt to Small Business Trends
Startup subscription boxes that are related to food, beauty products, apparel, and lifestyle will continue to be popular.
Within the next few years, we will see more entrepreneurs that have recently graduated from college.
12
The Expert’s Opinions
According to respondents of Small Business Trends survey, the best way to learn more about entrepreneurship is to start a company.
Asses all potential bottlenecks apart from the competition. Make sure your team is experienced enough and that you are aware of all small threats, which could lead to a larger threat.
When building your team, look for your business’s weak spots to identify the skill sets required to satisfy your company’s needs.
“The secret to successful hiring is this: look for the people who want to change the world.”
Marc Benioff, CEO of Salesforce
92% of business owners believe that having a website is the most effective digital marketing strategy.
Forbes mentions the criteria for a successful startup, “They have a product that meets a need, they don’t ignore anything, they grow fast, and they recover from the hard-knock startup life”.
The most valuable thing you can do as a founder is recognizing your downfalls beforehand and learning from other businesses’ failures. Apply this knowledge to starting your own startup.
Despite the startup failure rate, learning from your mistakes in business and the mistakes of others is the key to startup success and survival. Appreciate the competition, know where you stand, and take note of all startup trends in order to be at the top of your startup’s industry.
