40 Key Startup Statistics 2023 [Success & Failure Rates]

Susan Laborde

from Techreport on 2023-11-23 14:57 (#6GKWT)

Millions of startups emerge yearly, but many cannot survive the challenging business environment. Some businesses fail due to several factors, each striving for success in an already overwhelmingly competitive market. Startups have attracted significant investment globally, which is expected to continue to rise in the coming years. If you look at startup statistics, Latin America is one of the most active startup regions, with China and the United States having the highest number of unicorns.

Business owners are always looking for golden opportunities that will launch them into success. One or more persons can form a startup to provide a service or product to the public. As the business expands, people can achieve financial independence or develop new skills through startups. Let's start examining startup statistics and success rates globally.

Key Startup Statistics

The United States, with 71,153 businesses, has the highest market share globally.
61% of startups globally provided B2B solutions in 2020.
ByteDance is the most prominent unicorn company globally.
Fintech, e-commerce, and artificial intelligence are the fastest-growing startup industries globally.
10% of businesses fail in just the first year of operation.
15.4% of the entire United States population engages in a startup business.
The average startup business takes between 2 and 3 years to start making a profit.
Up to 95% of startup business owners have a minimum of a college degree.
About 60% of startups began operations with less than $25,000.
The United Arab Emirates came first in ranking countries with the best business climate.
More than 50% of startup businesses employ the services of a chief financial officer.

Comprehensive Startup Statistics

1. The United States, With 71,153 Businesses, has the Highest Global Market Share.

The United States has maintained the top spot in the list of countries with the highest number of startups globally. It took the first spot for three consecutive years. The percentage of startups in the United States accounts for 64.7% of the global number.India takes the 2nd position with 11,162 startups and ranks 5th in the order of countries whose environment is startup-friendly. India also has 4.1% of total unicorns worldwide.

2. B2B Solutions Were Provided in 2020 by 61% of Startup Businesses Worldwide.

Aside from the 61% of businesses that provided B2B solutions in 2020, 39% of startups gave B2C solutions the same year. These two categories of companies both catered to commercial transactions, though for different audiences. Meanwhile, B2B means business to business, while B2C means business to consumer. B2B and B2C are simply business ways that startups use to deliver their services and products to the final consumers.

3. Bytedance is the Most Prominent Unicorn Startup in the Global Market.

Unicorn companies are startups with a market share value of not less than a million dollars. Bytedance is the most valued among unicorn companies in the world. Bytedance is a technological company that owns TikTok, which is valued at over $350 billion. More than 600 companies have a market value of over $1 billion; China and the United States are leading in this regard.

4. Fintech, E-commerce, and Artificial Intelligence are the Fastest-growing Startup Industries in the World.

For the past 6 years, there has grown substantially with the emergence of startup companies. Fintech follows next with growth in cybersecurity, Edtech, and artificial intelligence.The e-commerce industry had a market value of 3.53 trillion between 2019 and 2020. In 2021, Fintech had a startup market value of 232.7 billion. In 2021, Edtech had a market value of 88.82 billion. The rate of startup growth in these industries is expected to continue growing in successive years.

5. About 90% of Startups Fold up After the First Year of Operation, While Only 10% Continue to Operate.

The statistics show that just 10% of startups keep striving after the first year of operation. The high failure rate experienced by startups can be attributed to several factors. The inability to raise sufficient running capital is a problem for 38% of startups, and 35% cannot meet a market need.Another 20% cannot overcome the stiff market competition, while 19% do not have a good business model. Here are other reasons for the failure of most startups:

Lack of a great team by 14% of startups.
Pricing and running costs by 15%.
Poor timing on setup by 10%.
18% fail due to regulatory and legal issues.
Poor product by 8%.
5% fail because of a lack of business passion and frustration.
7% fail due to a lack of cooperation between the business team and investors.
Poor planning by 6%.

6. 15.4% of the United States Population Engages in Startups.

With an involvement rate of 15.4% of the populace in the United States, success is imperative for startups. The startup arena is highly competitive as it attracts talented persons in various fields of human endeavor.Startups give their workers a modest payment in most cases.

7. The Average Startup Business Takes Between 2 and 3 Years to Start Making Profits.

Before commencing a startup business, you should do an in-depth study of the intended sales area. You should also make a cost analysis of the mode of operation for at least 2 years, including business emergencies. Remember that profitability could be delayed as some businesses would make gains two years from the launch date. One of the reasons most startups fail is due to the lack of proper planning and a good business model. The unavailability of these parameters is detrimental to the survival and success of a business.

8. 95% of Business Owners Have at Least a College Degree.

The statistics show that 95% of startups were formed by entrepreneurs with only a college degree. Some even have a master's degree or more. However, there are exceptions with people like Steve Jobs, Bill Gates, and Mark Zuckerberg, who did not have a college degree before starting to run their businesses. It is not a rule that you must have a college degree to succeed in business. However, it would be best if you didn't drop out of school to start a thriving business.

9. About 60% of Startups Commence Operations With Less Than $25,000.

58% of new businesses started below $25,000, while one-third commenced operations under $5,000. These amounts often cannot run and sustain most companies in the long run. Money is not the only deciding factor for the success of a business, as some small businesses can start with just $5,000. Opening and running a restaurant business or a medical facility requires more than $25,000.

10. The United Arab Emirates Came First in Ranking Countries With the Best Business Climate.

According to a report dated 2022 by the National Entrepreneurship, the United Arab Emirates had the best conditions for new businesses to strive and succeed.Saudi Arabia comes in second among the community of nations, Taiwan takes third place, and India is 4th in the first five ranking of best supportive economies for business.

11. More Than 50% of Startup Businesses Employ the Services of a Chief Financial Officer.

A survey of 895 companies discovered that over 50% of these businesses have a chief financial officer or someone in charge of the firm's finances. The CFO is charged with the responsibility for the economic welfare of the company. The officer oversees the financial records and predicts the company's financial direction.

Startup Investors and Financial Statistics

12. Venture Capital is Used by Just 0.5% of Business Owners.

The presence and activities of angel investors are well known, but only 0.5% of entrepreneurs get funding through them. This is because most venture capitalists are not interested in investing in startups. Some venture capitalists only invest in startups with a high potential to succeed in the shortest possible time and yield good returns on their investments.

13. Most Small Businesses Startup With Just $10,000.

Intuit QuickBooks stated that most startups started with just $10,000 or lower. This is because the amount used to start a business depends on certain factors, including the type and nature of these small businesses. A company can create and keep running with just $10,000, as there is no general, specific average amount for startups.

14. Venture Capitalists Receive Over 1,000 Business Applications Yearly.

Due to the highly selective nature of venture capital organizations, they most often invest in startups that require $250,000 and above. These venture capital companies usually conduct a background check on the finances of startups before committing their money.

15. Startup Female Founders Attracted $2.86 Billion from Venture Capitalists in 2018 Compared to $109.36 Billion from Their Male Counterparts.

There is a huge difference in the ratio of investment by venture capital firms on male and female startup entrepreneurs.In 2020, female founders had increased funding from venture capitalists by $20 billion, but not close to the financing their male counterparts received.

16. About 1% of New Businesses Attain the Status of a Unicorn.

Due to the challenges in the market and the high competition, the success rate for startups is low. Not all startups can hit the great feat attained by companies such as Uber, stripe, and other $1 billion companies globally.

17. 52% of Startup Companies in 2019 Anticipated Their Next Funding From a Venture Capitalist.

Statistics reveal that 52% of companies hoped to get their next fund from a venture firm. Meanwhile, another 17% had anticipated funding from angel investors and private individuals. Also, 8% expected to receive funding through private equity, and 6% expected a natural growth process.

18. 50% of Business Owners in 2019 Believe That Acquisition is Realistic.

The ideology of acquisition as a realistic goal for business owners was heightened in 2019 from the previous 57% in 2019.18% of startup businesses between 2018 and 2019 were on the lookout for IPOs, 16% in 2018 decided to remain private, while 17% planned to do so in 2019. 9% of business owners in 2018 were indecisive, and this increased in 2019 to 15%.

19. Just One-third of Startup Entrepreneurs Began Business Activities With Less Than $5,000.

In a survey by Kabbage on 600 successful startup companies in 2019, just one-third had started with less than $5,000. The insufficiency of funds did not stop these businesses from striving against challenges and stiff market competition.58% of surveyed revealed they started their business with barely $25,000. Another 65% stated the lack of money as the reason for being unable to start a business. 93% said they had calculated the cost of operations for 18 months alongside the startup business capital before commencing their business.

20. Just 30% of Businesses at Their Startup Stage Make a Profit.

The percentage of startups making profits cannot be overlooked, with just 30% enjoying earnings while 49% getting to a breakeven point. This shows a business climate where startups must compete while striving to profit.

Unicorn Failure Statistics

21. 99.9% of Startup Unicorns Fail.

Companies evaluated to be over $1 billion and not quoted in the stock market are called unicorns. Just 0.00006 startups achieved the status of unicorns and have been acquired by companies such as Canva, Space X, Grammarly, and Google.

22. More Than 1,200 Unicorns Globally Were Operational in October 2022.

540 companies achieved unicorn status globally in 2021. These billion-dollar companies are situated in 113 regions of the world. Most of these unicorn businesses are located in North America and totaled 1,200 worldwide.

23. 25 New Unicorns Emerged in the Third Quarter of 2022.

Since 2020, the number of emerging unicorns has never been as low as that of the 2022 third quarter, with just 25 new entrants.One of the contributing factors to the decline of unicorns was the reduction of investment made by venture capital firms.

Statistics of Fintech Startup

Fintech refers to the technology that enhances smooth and seamless financial transactions.This technology includes areas of artificial intelligence and encoded blockchain. It helps to ensure that the internal flow of financial transactions is well-secured:

24. Over 75% of Startup Businesses in Fintech Fail.

Statistics show that three-quarters of businesses experience failure at the startup stage.These startups involve companies in mobile banking, investment apps, and cryptocurrency.The majority of Fintech startups, even with funding, fail after securing funding from a venture capitalist.Only 25% of fintech companies succeed, while 75% fail even after receiving funding.

25. Investment in Fintech on Startups Accumulated Over $254 Billion in 2018.

Within twelve months (2017 to 2018), over 18,000 startups in fintech received a total of $254 billion in investment. The United Kingdom in 2019 had the highest investment growth rate in fintech, with $50.9 billion.

26. Fintech Successful Companies are Likely to Emphasize User Testing Combined With Data Collection Rather Than Creating New Technology.

Successful startup companies today have the advantage of more growth without necessarily creating new technologies. The ideology of placing more effort on user testing and data reiteration tends to work effectively for new fintech companies. This is fast becoming the concept of operation for many FinTech companies globally. Also, the use of AI in the operations of new fintech companies shows a great promising future for the industry.

27. About 80% of Finance Institutions are in Partnership With Fintech Companies.

80% of finance institutions' partnerships increased the capital venture investment of fintech in 2018 to $30.8 billion from its previous $1.8 billion in 2011.

28. Cryptocurrency and Blockchain Average Investment in 2018 Increased by Over $1 Million.

According to a publication by Coindesk 2018 on blockchain startup firms, venture capitalists investments totaled 28%. Blockchain and cryptocurrency-centric startups generated about $3.9 billion in the 3rd quarter of 2018 through venture angel investors.

29. Fintech Startups Constantly Face the Challenge of Getting New Customers.

Setting up a viable customer base is the biggest challenge faced by fintech companies globally. The competition in the market is stiff; therefore, getting partnerships is necessary for sustainable success. New fintech firms are faced with gaining their target audience and securing partnerships.

Startup Technology Statistics

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30. The United States had the Highest Share of the Technology Startup Market in 2019.

In 2019, the United States had the largest market for technology in the world, with $1.6 trillion. The major technological areas include information technology and business services at 28%, software at 22%, telecom services at 19%, devices and infrastructure at 18%, and innovative technology at 13%.

31. The Establishment of Computer Manufacturing and Electronics Startups Grew from 2007 to 2016 by 78%.

Manufacturers of computers and electronics in just 9 years experienced a massive growth of 78%. The increase in the number of startup firms in the computer and electronics manufacturing sector greatly influenced boosting the economy of the United States. Also, technological startups pay higher and have better job security when compared to what is offered at other industries' startups.

32. Yearly in the United States, an Average of 20 Technological Companies Making $100 Million in Revenue are Launched.

In the past 20 years, the United States has consistently been generating $100 million from technology companies, irrespective of the state of the economy. The setting up 20 tech companies yearly has boosted economic revenue and placed the technology sector on a high pedestal in the United States. Of these 20 emerging companies, 17 exist in 7 states, including New York, California, Illinois, and Massachusetts.

Startup Industry Share Statistics

33. 53% of Startups in the Construction Industry Failed in 2018.

The rate of failure by startups in the construction industry was the same in 2018 as that of the retail sector at 53%.

34. The Information Industry Experienced 63% Startup Failure.

63% startup failure in the information industry was the highest among all sectors.

35. $1.9 Billion was Raised by Startups in Real Estate in 2019.

The level of funding raised by the real estate industry in 2019 changed many people's perceptions of selling and purchasing a property home.

36. The Number of Unicorns is Expected to Increase in Successive Years.

Startup companies achieving over $1 billion are expected to keep rising in the coming years. The number of unicorns universally increased tremendously by 353.1% from 2013 to 2018.

37. More Graduates Will be Entering into Startups in the Future.

According to a report by Entrepreneur Online, more entrepreneurs will emerge from around the globe in successive years.

38. Collaborations Among Startups will be Heightened in the Coming Years: Startup Basics.

The collaboration rate between startups across various industries will likely increase in successive years.

39. The Sharing Economy Will Achieve A Total Sales of $335 by 2025.

Shortly, companies such as Airbnb and Uber will be launched in the global arena. PWC has predicted the sharing economy will experience a growth in sales to $335 billion by 2025.

40. Startups Centered on Clothing, Beauty, and Food will Grow Continuously.

The subscription market focused on providing beauty products, apparel, and food is expected to grow tremendously and gain more popularity in successive years.

Conclusion

Setting up and managing a business can be challenging and daunting with the high market competition. However, the availability of venture capital firms has helped provide startups with the needed capital and resources to keep afloat and succeed.

Though these venture capital firms are selective in investing in startups, entrepreneurs should harness every opportunity on their funding. The technological industry has been able to strive over the years alongside beauty, food, and apparel startups. These sectors will keep improving in the coming years.

Frequently Asked Questions What is the rate of startup success?

About 10% of total startups in industries achieve success. Startups in industries such as communications and technology are more likely to attain success than other industries.

Why do most startups fail?

One major reason for the failure of most startups is the mismatch of product or service with the target market's desires. Other factors include insufficient funds, poor marketing strategies, and obsolete technology.

What is the rate of startup failure in 2023?

20% of startups fail in just two years of operation, 45% cease to exist after the first five years, and 65% fail within the first 10 years.

Sources

The post 40 Key Startup Statistics 2023 [Success & Failure Rates] appeared first on The Tech Report.

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