The hype surrounding startups continues to attract millions of entrepreneurs and aspiring business owners worldwide. Everyone wants to jump on the bandwagon, launch the next industry disruptor, and exit after a billion-dollar deal.
If this sounds too good to be true, that’s because it is, and we have the latest startup statistics to prove it’s not all rainbows and unicorns (pun intended). Of course, failure rates shouldn’t stop you from trying since it’s almost impossible to predict where the next successful startup is coming from.
Top Ten Startup Statistics and Facts
Startups and small businesses employ 47.1% of the American working population.
There are 862 unicorn startups in the US.
In 2021, the highest-valued unicorns in the United States were SpaceX and Stripe.
The average equity exchanged for seed funding is between 10% and 25%.
One-third of startups receiving Series A funding go through a startup accelerator.
On average, 137,000 new startups appear daily worldwide.
20% of startups fail within the first year.
69% of startup owners say that marketing mistakes killed their projects.
Around 90% of early-stage investors will see 0% investment returns.
The average tech startup founder is 41.9 years old.
Small Business and Startup Statistics
Startups and small businesses employ 47.1% of the American working population.
Small companies and startups are essential for the growth and success of the U.S. economy, given that these enterprises employ nearly half of the working population.
Moreover, data from 2017 reveal that the United States had more than 31.7 million small businesses, making them the lifeblood of the American economy.
(Investopedia)
After COVID-19, 62% of business owners are concerned for their company’s future.
The pandemic disrupted almost every industry, so it’s not surprising that two-thirds of business owners worry about their business's future.
On the other hand, post-lockdown startup trends in 2021 instilled some optimism, revealing that most (55%) business owners expected everything to return to normal in six months to a year.
(US Chamber of Commerce)
85% of business owners in the US are concerned about record-breaking inflation.
The growing inflation is wreaking havoc on the global economy, with investors backing out and shortening the runway for startup owners.
Because of the crisis, two out of three small business owners report raising prices within the past 12 months. Likewise, four out of ten admit they had to cut staff, while 39% report taking out a loan.
(US Chamber of Commerce)
There are 862 unicorn startups in the US.
Startup statistics for 2023 are not all doom and gloom, given that the number of ultra-successful startups in the United States continues to grow. More precisely, 121 companies became unicorns in 2022.
Currently, Americans have more than eight hundred enterprises valued at one billion dollars or more, with $139 million of average funding per unicorn. On average, it takes 4.4 years for American startups to advance from Series A funding to unicorn status.
(Tracxn)
In 2021, Series A funding deals increased by 35% year-over-year.
2021 was another turbulent year for startups worldwide, but the number of startups receiving Series A funding in the US jumped by 35% compared to 2020. Namely, around 800 deals happened in 2021, with a total value of $22.2 million.
Consequently, the overall funding value increased, given that it amounted to $15.6 million in 2020.
(Fundz)
In September 2022, Series A startups had a median pre-money valuation of $23.1 million.
Series A funding shows a positive trend, and the same goes for Series B and Series C startups. For instance, Series B startups had a pre-money valuation of $40 million.
Series C startups attracted high-value investors like private equity firms, late-stage VCs, banks, and hedge funds because Series C startups had a value of around $68 million.
(Fundz)
Startup Trends for 2023 & Beyond
In April 2021, the highest-valued unicorns in the United States were SpaceX and Stripe.
Space X, Elon Musk’s corporation headquartered in Hawthorne, California, topped the list of American unicorn companies with the highest market valuation as of April 2021.
Valued at 74 billion dollars, SpaceX was nearly as big as numbers two and three on the list of the highest-valued unicorns. Namely, Stripe and UiPath market valuation in 2021 was 36 and 35 billion dollars, respectively.
(Statista)
60.87% of business owners start their companies to be their own bosses.
The latest statistics on entrepreneurs reveal that two-thirds of business owners go into business because they feel ready for leadership. Likewise, 47.64% say that the motivation lies in their overall dissatisfaction with the corporate climate in modern America.
In addition, 31% of business owners report going into business to pursue their passions, while 21.36% admit starting a company because the opportunity presented itself.
(Guidant Financial)
The average equity exchanged for seed funding is between 10% and 25%.
Startup owners can seek funding from various sources, including friends, family, angel investors, crowdfunding campaigns, or startup accelerators. Of course, this comes at a price, and startup stats reveal you might give 10%-25% of the equity in exchange for seed funding.
Quality networking is the basis for seed funding, aside from your ability to show the product/market fit and “sell the dream.” Seed funding can range from thousands of dollars to around $10 million.
(Fundz)
One-third of startups receiving Series A funding go through a startup accelerator.
Accelerators are mentor-based programs that support early-stage companies by providing limited financial aid and professional guidance in exchange for equity. Thus, joining a top-tier accelerator improves the startup’s chances of raising Series A funding.
And although accelerators boost the average success rate of startups in America, these groups only accept around two percent of applicants.
(Fundz)
41.02% of business owners report the expansion of their business model as the top priority for 2022.
While many startup owners dream about expanding or remodeling their businesses, more than half (51.04%) of business owners admit their focus for 2022 was to increase staff.
Likewise, more than a third (39.70%) say that investing in digital marketing ranks among their top priorities for the current year. Prioritizing these three elements should help entrepreneurs battle challenges like lack of cash flow, administrative work, supply chain shortages, and growing inflation.
(Guidant Financial)
Global Startup Statistics & Facts
On average, 137,000 new startups appear daily worldwide.
Massive statistical research by The Global Entrepreneurship Monitor (GEM) revealed that around 300 million people are planning to start a business.
However, only around a third of those startup ideas get off the ground, and the study found that around 50 million new tech startups appear every year. On the other hand, approximately 120,000 enterprises are terminated daily.
(NetShop)
In 2021, the highest-valued unicorn in the world was ByteDance.
Although the United States has the most unicorns, statistics reveal that businesses with the highest success rates come from the Asia-Pacific region. For instance, ByteDance, the Chinese giant behind TikTok, was valued at approximately $350 billion in 2021.
Notably, the second highest-valued unicorn in last year’s report also came from China, given that Ant Group, a Chinese fintech corporation, ranked ahead of the American-based SpaceX.
(Statista)
The highest number of unicorn exits happens in North America.
Asia-Pacific has several prominent players in the unicorn world, but the North American region has the highest percentage of unicorn exits.
For instance, 45 successful startups have gone public in North America between January and July 2021, compared to 12 unicorns from Asia-Pacific and six from Europe.
(Statista)
Startup Failure Statistics & Trends
20% of startups fail within the first year.
Most startup owners dream of launching the next unicorn, but the harsh reality is that two out of ten enterprises fail within the first twelve months. In addition, half of the startups fail within five years.
Of course, startups fail for various reasons, but alarming statistics from 2021 reveal that 65% of businesses fail within the first ten years.
(Investopedia)
51.61% of startups survive the first five years.
Running a startup in the current economic situation is challenging, and the percentage of startups that fail illustrates this point. Namely, a recent survey showed that only 22.68% of startups in the United States are six to ten years old.
As expected, the percentage drops as we look at a more extended period, and approximately 11% of enterprises are 11 to 15 years old.
(Guidant Financial)
Startup founders overestimate their intellectual property's value by 255%.
Revolutionary business ideas can have immense value, but most startup founders overestimate their concepts before product/market fit. Thus, many early-stage companies fail due to high expectations and unrealistic targets.
Improper assumptions and poor market research contribute to the overall startup failure rate because startup owners need 2-3 times longer than expected to validate the market.
(Failory)
69% of startup owners say that marketing mistakes killed their projects.
Marketing mistakes were deadly for more than two-thirds of enterprises included in a recent study, given that 46 out of 83 startup owners blamed marketing mistakes for the project’s failure.
Surprisingly, only around 16% of startup owners referred to financial problems like monetization as the primary reason for failure.
(Failory)
Around 90% of early-stage investors will see 0% investment returns.
Given the low startup success rate, it’s no surprise that nine out of ten investors see little to no returns on their investments. After all, Stanford and UC Berkeley researchers discovered that approximately 90% of ventures fail.
Nonetheless, early-stage investors chase the big win, playing a low-risk/high-return game and hoping to get equity in a unicorn or a deca-corn (companies valued at 10 billion or more).
(Forbes)
85% of healthcare and social assistance startups survive the first year.
The Bureau of Labor Statistics estimated a 21% growth for healthcare and social assistance businesses, making these sectors attractive to entrepreneurs and investors.
On top of that, the startup survival rate in these industries is higher than average, with 75% of startups surviving their second year and around 60% making it to year five.
(Fundera)
75% of businesses in the transportation and construction industries survive their first years.
After the pandemic, startups in the healthcare industry attracted the most attention. On the other hand, businesses in many sectors struggled to survive, with failure rates skyrocketing.
For instance, around 25% of transportation and warehousing industry startups fail within the first year, with similar failure rates applying to businesses in the construction industry.
(Fundera)
Startup Demographics: Data & Stats
The average tech startup founder is 41.9 years old.
A massive recent analysis of approximately 2.7 million startups revealed that the average tech business has a 41-year-old founder. Similarly, the fastest-growing tech startups had 45-year-old founders, on average.
In addition, data showed that 50-year-old entrepreneurs have two times more chances of succeeding as tech startup owners than 30-year-olds.
(Kellogg Insight)
25-year-old entrepreneurs make up only 1.7% of tech startup founders.
The popular belief that younger generations dominate the tech startup segment might be a myth, given that the latest startup stats reveal a low presence of 25-year-olds at the head of tech ventures.
Notably, studies indicate that the average 40-year-old is two times more likely to launch a successful startup than the average 25-year-old. Plus, 40-year-olds are 1.3 times more likely to establish a top 0.1% enterprise.
(Kellogg Insight)
Boomers and Gen Xers have the highest percentage of business owners.
Statistics on small businesses and startups show significant generational differences, given that boomers own 45.45% of enterprises while Gen Xers have 46.6%.
On the other hand, small business startup statistics show that millennials launch only around 7% of ventures. The Zoomers, or the Gen Z population, make up less than 1%.
(Guidant Financial)
66% of millennials believe they could handle the marketing aspects of growing a startup.
Younger generations are more comfortable with modern technologies, which could explain why only 28% of baby boomers think they can handle social media and market elements of growing a business.
Likewise, 48% of millennials are confident that all Americans have the means to start a business, while 84% would be more satisfied as entrepreneurs than working for someone else.
(Startup Nation)
The percentage of female startup founders is 22.35%.
Even though the number of female entrepreneurs is rising, the massive gender gap persists. After all, statistics reveal that men own 77.47% of small businesses and startups in the United States.
In addition, the data related to demographic structure shows that 84.75 business owners identify as White or Caucasian, with 41% supporting the Republican party and 22% identifying as Democratic.
(Guidant Financial)
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Conclusion
There you have them—the latest startup statistics and small business trends to better understand how entrepreneurs can navigate the turbulent waters of a global economic crisis. We compiled data from various reputable and relevant sources to show the pros and cons of launching a startup in 2023 and the years to come.
After all, startups can “go viral” and offer jaw-dropping ROI, but only if you get the formula right. Yet, this can be easier said than done because growing a startup requires plenty of money, time, and energy.
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