Everybody dreams of being their own boss. The thought of waking up after eight, working out, eating breakfast, and going to work at 11 a.m. only to attend some meetings is hugely appealing. Most people want this kind of morning routine, and being an entrepreneur can make this lifestyle possible.
Contrary to popular belief, running a business is a far cry from what people usually think. It’s not glamourous or easy. Most times, you’ll land up sleeping on your office couch or the floor to get through all the work.
Several startup statistics detail how challenging it is to run a business. If you’re looking to build a startup or perhaps are just eager to dive into the most informative stats, you’re on the right page.
Gripping Business Startup Statistics (Editor’s Choice)
- 565,000 startups are launched in America monthly.
- 69% of US entrepreneurs start their businesses at home.
- In 2019, there were 452 startups with a valuation of at least $1 billion each.
- 7.9% of startups have managed an impressive growth to unicorn status in less than a year.
- 90% of startups fail.
- Male startup founders raise funds eight times more than female founders.
- Female founders generate 10% more revenue than male-founded startups.
- Personal savings and credit are the primary sources of funds for 57% of startups.
General Startup Statistics
1) Each month, 565,000 startups are launched in the US.
The US is home to some of the most successful startup businesses, such as SpaceX, Airbnb, Instagram, and LinkedIn. People have realized that it's possible to create something large-scale and successful out of a single idea alone. It must be this notion that has inspired more than half a million entrepreneurs to launch their companies every month.
2) In 2017, 415,226 new startups created 1.7 million jobs.
Startups can drive job growth. In 2017, the number of startups in the US surpassed the previous average of 400,000, giving more people jobs.
In 2020, millions of people lost their only means of living because of the pandemic. On the positive side, many of those who lost their jobs have started their own business. As everyone starts to recover from the crisis and things slowly get back to an even keel, who knows, we might even see more entrepreneurs emerging in the near future.
3) 69% of entrepreneurs in the US start their businesses at home.
The most inspiring entrepreneur trends retell the stories of how Amazon and Apple - two of the Big Five multibillion-dollar companies today - started in home garages. Bezos’ and Job's humble beginnings serve as proof that anyone can build a successful company even from the comfort of their home.
Their stories have inspired thousands of people around the globe to start their own businesses. In the US alone, 69% of entrepreneurs launch their startup businesses at home and not in some fancy office.
4) In 2019, there were a total of 452 unicorn companies.
The term “unicorn” was first coined by Aileen Lee, founder of Cowboy Ventures. It refers to a technology startup valued at $1 billion or more. Out of millions of startups worldwide, only a handful reach unicorn status.
In 2019, 452 unicorn startups raised a whopping $345 billion and had a cumulative value of $1.6 trillion. That same year, over 40 new startups joined the unicorn list, and the US became the leader in the number of unicorn companies (196), followed by China (165).
5) On average, it takes seven years to grow startups into unicorns, but 7.9% manage to achieve that status in less than a year.
Running a business requires hard work, sweat, and time. Entrepreneurs and their startup employees toil almost round the clock, hoping to grow their startups to unicorn status.
While the average time for a startup to reach the $1 billion mark in valuation is seven years, a small group of startups (7.9%) has displayed impressively rapid growth. Companies like Xiaomi, Global Fashion Group, and Illumio became unicorns in just under a year.
6) The highest-valued unicorn company in the world is based in China and is worth $200 billion.
At the start of 2020, there were over 600 unicorns worldwide, most of which were headquartered in China and the US. The highest-valued unicorn company, worth approximately $200 billion, is Ant Group, a Chinese fintech company and an affiliate of Alibaba Group.
In recent years, the average growth rate for startup companies has been remarkable. The ever-expanding list of unicorn companies shows that people today, especially the younger generations, are more business-aware and literate.
7) Of the top 50 unicorns, only 22 are US companies.
When we say “startups,” many will think of Silicon Valley as these business ventures have been synonymous with the US. However, the truth is only 44% or 22 out of the 50 most successful startups are US companies. The rest of the best unicorns are from other parts of the world, like China, India, and the UK.
8) The global startup economy reached the value of $2.8 trillion in 2019 and is growing 10% per year.
The startup growth rate is about three to four times faster than in other sectors. With more young adults venturing into startups, it's no surprise that its growth is exponential. That's why, if you have an idea that can help solve people's problems perhaps, you might want to take the plunge and become an entrepreneur.
9) 90% of startups fail.
Many entrepreneurs dive headfirst but end up heartbroken and in debt because their ventures don’t work out the way they’ve envisioned. There are several reasons why startups fail, but one of these is the lack of business skills.
The numbers suggest that by the end of their first year, 21.5% of startups fail, and 30% will fail in the second year. By the end of the fifth year, that percentage will jump to 50% and come to a staggering 70% in the 10th year. The high startup failure rate suggests that, as an entrepreneur, you should first arm yourself with knowledge and skills before venturing into this kind of career.
10) The main reason why 42% of startups fail is the lack of a market need; 29% run out of funds.
Numerous startup failure rate statistics reiterate the importance of market research. Conducting market research is crucial for taking an idea and turning it into a startup. Based on your findings, you can determine if there's a need for your service or product in the market. After all, trying to sell a burger to a person who isn't hungry or doesn't eat meat is a waste of time and effort. The absence of a market need is the top reason why startups fail.
What about when there's a need for your product or service, but you don't have enough money? According to the analysis, the second cause of startup failure is the lack of financial means, often derived from mismanaging the available funds.
Startup Founder Statistics
Small business startup statistics can reveal whether entrepreneurial success has to do with the qualities of the founders, so let's take a look at some of the most illuminating startup founder stats.
11) In 2019, 20% of newly funded startups had female founders.
In 2009, only 10% of startups worldwide were founded by women. Ten years later, however, the percentage doubled, increasing the number of global startups with female founders to 15,105. Female entrepreneurs’ efforts are beginning to be recognized around the world, and this spells opportunities for them to show that they stand side by side with male entrepreneurs.
12) By the end of 2019, 21 startups founded or co-founded by women became unicorns.
Startup statistics for 2018 highlighted the debut of 15 unicorns that had at least one female founder. Fast forward, the year 2019 was a good year for businesswomen - a total of 21 startups that were founded or co-founded by women reached unicorn status.
The male-dominated business world is slowly creating space for women to showcase their leadership skills within the startup sphere.
13) Startups with male founders raised $195 billion in 2019.
As business startup statistics clearly show, most startups today are led and founded by men, so it makes sense that men will raise more capital for their businesses than women. However, some investors just outright prefer to fund male-founded startups. In 2010, male founders raised $31 billion, and in 2019, the funding got to $195 billion compared to the $6 billion raised by female-only led companies.
14) In 2019, the investments that went to companies with at least one female co-founder reached $26.7 billion and $6 billion for startups with female-only founders.
According to a few startup company statistics, 2019 was undeniably a blast for female entrepreneurs. Many women chose to brave the path to entrepreneurship, breaking those society standards endemic to the business world.
Investors are now putting billions of dollars into female-founded companies, helping create a balance in diversity. And as we all know, diversity, including among entrepreneurs, fosters productivity and innovation.
15) For every dollar raised by a female startup founder in 2018, a male founder raised $8.33.
Although there's been a slight increase in the number of women entrepreneurs in recent years, diversity still needs to improve significantly. One of the startup funding statistics emphasizes the disparity between investors’ preference to put money into male-founded startups and avoid funding female-founded startups. This finding reveals that a male founder raises more than eight times more capital than a female founder.
16) Female-founded companies generated 10% more revenue over five years than male-founded companies.
A BCG analysis explains why women-owned startups perform better than their male-led counterparts. Despite raising less than half the money in funds, female-founded companies generate more revenue. Male-founded businesses produced $662,000 in profits, and female-owned startups generated $730,000.
Zooming in on the numbers, these startup financial statistics show that for every dollar invested, female entrepreneurs make 78 cents in revenue. In contrast, male-founded companies only make 31 cents. Does this imply women leaders are better than men? According to this analysis, it seems so. However, we can’t discount the important role men play in workplaces. Therefore, organizations should consider an equal representation of men and women in the workplace.
17) In 2020, Stanford University had 465 graduates who founded startups - the highest number in the US.
One of the exciting startup technology statistics related to US universities reveals that, of all graduates in 2020, 465 startup entrepreneurs were from Stanford University, surpassing MIT by 98.
18) People with an MBA degree founded one in every four most-valued unicorn startups in 2019.
Some media and commentators believe that unicorn founders are mostly science, technology, engineering, and mathematics (STEM) graduates from selected universities, such as Harvard, Berkeley, MIT, and Stanford.
Although intriguing startup technology statistics affirm that this might’ve been true once, a recent analysis revealed other facts about the founders of the top 50 unicorns: 24% or 12 of them were founded by former MBA students, and 38% have a founder with a business administration degree, either at a graduate or undergraduate level. Therefore, successful founders aren't only those who have studied STEM-related disciplines.
19) A 40-year-old entrepreneur is 2.1 times more likely to found a successful startup than someone who is 25 years old.
A popular entrepreneurship myth is that the companies regarded as the biggest startup failures were founded by older entrepreneurs and that only young people thrive in this business. Imagine being one of those fortunate people in their 20s who run multimillion startup businesses - it’s the stuff of dreams.
There's nothing wrong with the idea of starting a business at a young age. However, according to a study conducted by the US Census Bureau and MIT, middle-aged entrepreneurs are twice as likely to succeed in business as entrepreneurs in their 20s. The implications of these findings can make younger entrepreneurs reconsider rushing into business ventures. They could also encourage their older colleagues to finally take that step.
Startup Funding Statistics
Startup funding can come from different sources - friends, families, angel investors, venture capital firms, banks, and more. The capital enables the founders to take a simple idea and make it a business that generates profit.
There are what we call funding rounds in every development stage of a startup, from seed to series A, B, C, and D. Below are some interesting facts about startup funding.
20) 57% of startups are funded from personal savings and credit.
In most instances, entrepreneurs use their personal savings to fund their tech or non-tech startups. Some even use their credit cards to raise seed money. These two ways seem to be the easiest route to raise funds and set a business in motion. On average, an entrepreneur invests $48,000 into the startup.
21) About one-third of small entrepreneurs start their business with less than $5000.
Funds fuel a business. A 2019 research covering 600 small businesses shows that a third of entrepreneurs started with less than $5000 of capital. Moreover, 58% started with less than $25,000, which is no mean feat considering that most entrepreneurs launch their businesses using personal savings and credit.
Most entrepreneurs choose to bootstrap a business using their own funds, which is okay as long as there’s a consistent flow of funds.
22) US startups raise an average of $78,406.
In the distant past, it took more than an idea and hard work to start a company. You needed to be well-off and personally fund the business to get it off the ground. But several small-business growth statistics testify that an entrepreneur can now raise funds from various sources, such as family, friends, or investors. Today, startups thrive by obtaining thousands to millions of dollars in funding without having to rely on personal savings.
23) Angel investors fund only 0.91% of startups.
Angel investors are private investors with the financial capacity to fund startups. In exchange for giving capital, they take shares or a percentage of ownership in the company.
When personal savings and credit don’t suffice, startup founders look for angel investors to provide them with capital. The average investment a private investor gives is $74,955.
24) The median time between the seed and series A funding rounds is 22 months, from there to series B 24 months, and 27 months from series B to C.
Running out of funds is one of the worst things that can happen to a startup. That’s why funding rounds are essential in every startup development stage.
Startup financial statistics cite that the seed rounds provide anywhere from $10,000 to $2 million. After about two years, the startups receive the series A funding. In this financing round, investors expect a high return, meaning that founders need a viable strategy to turn investments into long-term growth. The rest of the funding rounds continue through series C and sometimes D, with even greater financial means required as the startups expand.
25) Less than half of seeded startups receive the second round of funding known as series A, and only 63% of startups that receive the series A funding reach the series B stage.
If you’re wondering how many new businesses start each year, the answer would probably shock you, as we only hear of the very few startups that manage to make the headlines by taking off successfully and staying afloat afterward.
Not all seeded startups make it to the next funding round or series A - only 48% in fact. Funds are a business’s lifeline and one of the major reasons why most startups fail. If there are no funds, it becomes difficult for a company to meet its operational needs.
Similarly, not all startups that receive series A will get to the series B funding round.
Startup Exit Statistics
An “exit” happens when investors decide to get rid of their shares in the company. There are two ways to exit. The first is when the startup company goes public, and the second is when a larger firm acquires the startup.
26) In 2018, 4,228 startup exits transpired globally.
Some startup companies fall into the category of "lifestyle businesses." These are the type of startups created only to be sold later on for millions or even billions of dollars. We've heard stories of startups that were sold for millions via an exit, and that's exactly how entrepreneurs make a living with lifestyle businesses. They build a startup company, grow it, then sell it for millions when the right time comes. This is one of the reasons why the volume of worldwide startup exits reached 4,228 in 2018.
27) Startup exit deals worldwide hit $219 billion in 2018.
Investors will want to cash in their investments after a few years. That’s why exits mean a great deal to them.
If a company goes public, the investors can sell their shares. If a large firm buys it, they’ll receive payment. These exit deals have been one of the enticing startup trends, revealing how investors make money by lending funds. In 2018, exit deals reached a colossal value of $219 billion.
28) US companies acquired nearly 13,000 startups by 2018 - the largest volume of exit deals worldwide.
From 2010 to 2018, the United States had an enormous number of exit deals, with 12,780 startups being acquired by American companies. Meanwhile, Europe recorded only 5,917 such deals.
The US is known for several successful startup stories. It’s undeniable that the country has people with great minds who are also very business-focused. The considerable interest of Americans in business explains why mergers and acquisitions (M&A) have been prevalent in the startup market, particularly in the tech industry.
29) In Silicon Valley, entrepreneurs with successful exits are 47 years old on average when they start their business.
We hear hundreds of stories about young entrepreneurs running top Silicon Valley startups. Somehow, these stories have created a form of social conditioning and influenced young entrepreneurs to the point of them dropping out of college to start a business.
However, it's not the age but the experience that makes a great businessman. On average, the entrepreneurs in Silicon Valley who had successful exits founded their businesses at the age of 47.
30) 2018 was the best year for unicorn exits, with 14 acquired unicorns and 39 going public.
Investors frequently ask: "When is the best time to exit?" Knowing the right time to start looking for a return is essential. Startup exit statistics attest that 2018 was a profitable year for investors, with several unicorn companies going public or being acquired by larger companies.
Some entrepreneurs say that to maximize the selling prices, exiting when the growth rates are high is ideal. But like in any other business, there are different exit strategies, and while one approach may work for some, it may not work for others.
Conclusion
Knowing the current startup statistics will expand your view of entrepreneurship. You will get ideas on what works and what doesn’t when launching a business. Although the younger generations’ enthusiasm to start a company in their 20s is refreshing, they should think about all the aspects before taking the plunge.
Running a startup business is a 24/7 job. It’s laborious, grueling, and stressful, so you need to be ready to sacrifice your time and energy. If you do decide to dive in, always conduct a market research first to find out what the current market needs. Remember, your business exists not for your needs but your future customers’ needs.
