If you’re thinking about launching a startup, getting familiar with the latest startup statistics is no longer a choice but a necessity. The idea of running a business is certainly a captivating one, but it can also be challenging.
Many factors should be considered, such as market research, promotion, team members, potential investors and partners, etc. There are also some unforeseen circumstances that no one can control.
If you’re second-guessing yourself, here’s one of the most encouraging startup facts: Some of the most profitable companies started as startups and home businesses, and their founders are now world-famous entrepreneurs like Mark Zuckerberg, Jeff Bezos, and many others.
However, knowing this one fact is surely not enough to decide to be your own boss. With that being said, here’s the extensive list of statistics on startups that will help you understand entrepreneurship a bit more.
Key Startup Stats and Facts (Editor’s Choice)
- The United States is the country with the highest number of startups.
- 7.1% of all startups operate in the fintech industry.
- 42% of startup failures happen due to no market need.
- Artificial intelligence startup funding grew from $1.7 billion in 2012 to over $15 billion in 2017.
- In 2018, 543,000 new businesses were launched each month.
- Freelancers account for 35% of workers in the US.
- Between 2012 and 2017, the funding of robotics industries increased by 1,400%.
General Startup Statistics
Before we dive into details, let’s take a look at some common statistics about startups. From the most valuable unicorn company in the world to some of the most frequent problems startups face, these general stats will amaze you.
1. The United States is the country with the highest number of startups.
With the current number of 82,612 startups, the US takes the lead. Second place goes to India with 9,743 startups. The third on the list is the United Kingdom, with 5,590 startups. The number of startups in the US is more than three times bigger than the number of startups in the following nine countries combined: India, UK, Canada, Indonesia, Germany, Australia, France, Spain, and Brazil.
2. The world’s highest valuable unicorn company is a Chinese fintech company ANT Group valued at $125 billion.
ANT Group resulted from corporate spin-off Alibaba Alipay conducted in 2014. There are more than 600 unicorn companies globally, and the vast majority of them are located in the United States and China. In case you’re not familiar with the term, unicorn stands for startups that are valued at $1 billion or more.
3. The average startup growth rate is 178% in revenues for the first year.
The average growth rate for the second year is 100% and 71% for the third year. However, startup growth rates vary by country, industry, and stage of development.
4. Advanced manufacturing and robotics industry funding grew by 1,386% between 2012 and 2017.
Blockchain startups have gained momentum in the past several years and had a similar funding growth between 2012 and 2017. More precisely, the funding value of blockchain startups grew by 1,321% during the said period.
5. One of the most common startup problems is poor planning.
Startups need to come up with both short-term and long-term plans. Other common problems startups face include:
- Insufficient capital
- Poor leadership
- Failure to listen to customers
- Indistinguishable products
- Inconvenient location
6. The most popular startup in the manufacturing sector in the US is Airstream.
Airstream makes trailers and recreational vehicles in its Jackson Center in Ohio. It has been making these iconic trailers since 1952. While the company primarily sells to American customers, it also ships trailers across the globe.
Burt’s Bees (lip balm), California House (custom-made furniture), and Gorilla Glue (adhesives, sealants, and tapes) are also popular manufacturing startups in the USA.
7. Over 69% of startups started as home businesses.
(Small Business Trends)
The reason why most startups start as home businesses is the lack of funding needed to cover office costs. However, over half of the established businesses that are at least three years old in the United States continue operating from home.
8. The number of US startups reached 31.7 million in 2020.
The number of startups in the US in 2020 made up nearly all businesses in the United States (99.9%). This number increased by 3.15% from 2019 to 2020 and 7.09% over the period of three years between 2017 and 2020.
9. According to the Kauffman Foundation survey, 95% of surveyed entrepreneurs have at least a bachelor’s degree.
According to the latest entrepreneurship statistics, 5% of entrepreneurs did not graduate from high school.
10. According to startup success rate by country, around two-thirds of 2019 unicorn newcomers were American.
Generally speaking, the United States takes the lead when it comes to the number of unicorn startups. According to data, of 452 companies, 196 companies are American, while 165 companies are Chinese. In 2019 alone, 35 unicorns emerged in the US. Moreover, 20 of those 35 companies have headquarters in the San Francisco Bay Area.
Global Startup Statistics
From the most successful businesses in the world to the most active regions for startups, these global stats will allow us to understand startup companies on a global scale. This might help you narrow down your choices when it comes to finding the best country to start a business.
11. As opposed to only 38% of traditional enterprises, 55% of startups have already adopted a digital business strategy.
Implementation of new technologies and investments in artificial intelligence are some of the biggest startup trends.
12. The world’s most innovative company is ServiceNow, with 39.02% of 12-month sales growth.
ServiceNow was founded in 2004, and it offers enterprise cloud computing solutions (IT software and services industry) with 3.7 billion in sales. Its headquarters are in Santa Clara, California.
The second on the list of most innovative companies worldwide is Workday, with 36.07% of 12-month sales growth and $3.6 billion in sales. Salesforce.com takes third place with 24.88% of 12-month sales growth and 17.1 billion in sales.
13. According to entrepreneurship statistics, Chile is the world’s most entrepreneurial nation, with an entrepreneurial score of 76 out of 100.
(The Boss Magazine)
According to its entrepreneurial score, Chile is considered the best country to start a business in 2021. The high score is based on factors such as education, innovation, funding, and fear of failure. India takes second place with an entrepreneurial score of 69, and Guatemala is in third place with 67 points.
14. The highest valued startup is a Chinese unicorn Bytedance (AI company) valued at $140 billion.
Didi Chuxing (also a Chinese unicorn in the transportation industry) is the second highest-valued startup worth $62 billion. From third to tenth, other top startups in the world are:
3. SpaceX - Space flight ($46 billion)
4. Stripe - Fintech ($36 billion)
5. UiPath - AI ($35 billion)
6. Roblox - Software and services ($29.5 billion)
7. Databrix - Data management ($28 billion)
8. Rivian - Transportation ($27.6 billion)
9. Nubank - Fintech ($25 billion)
10. Kuaishou - Video sharing ($18 billion)
From SpaceX to Rivian, these are all US companies except for the last two: Chinese (Nubank) and Brazilian (Kuaishou). Evidently, US startups account for 60% of the top 10 highest-valued startups in the world.
Startup Failure Rate Stats
Before diving into entrepreneurial waters, it’s wise to look at statistics on startup failure. Let’s see how many startups fail, the highest and lowest failure rates by industries, and the main reasons for failure.
15. According to the BLS, 25% of businesses in the construction and transportation industries don’t survive their first year.
What’s more, 35% of these businesses fail in their second year, and 60% fail by their fifth year.
16. As of 2018, the tech startup failure rate is 63%, which is the highest failure rate of all startup industries.
The information technology industry has the highest failure rate when it comes to startups. The construction industry has a 53% failure rate, followed by manufacturing (51%), services (45%), education, health, and agriculture (44%), and finance and real estate (42%).
17. Around 90% of new startups fail.
According to the startup failure rate by stage, 20% of startups fail in the first year, 30% fail during the first two years, 50% fail within five years, and 70% fail in their 10th year.
According to these statistics, only 1 in 10 startups survive in the long run. It’s important to add that the failure rate exponentially increases over time.
18. 17% of restaurants fail in the first year.
There’s a general notion that 90% of restaurants fail during their first year, but that’s not true because only 17% close within a year. Compared to other industries where the failure rate is 19%, restaurateurs fail less often than real estate agents or landscapers.
19. 29% is the percent of startups that fail because they ran out of money.
Furthermore, 14% of startups fail due to poor marketing, 17% of small businesses fail due to poor service or product, and 42% fail due to no market need for their service or product.
20. 15% of healthcare and social assistance businesses fail in the first year.
According to the business failure rate by industry, the healthcare and social assistance industries have the lowest failure rate. 15% of these businesses fail in their second year, whereas 40% fail in their fifth year.
21. Only 50% of startups manage to survive the first five years.
The reality is that 90% of new businesses fail. Furthermore, 33% of businesses survive for 10 years, and only 40% of businesses manage to turn a profit.
22. According to the entrepreneurship failure rate, 22.5% of all entrepreneurs fail in their first year.
What’s more, around 50% of businesses with employees survive five years, while one-third of entrepreneurs manage to keep their businesses running for 10 years.
23. Around 7,000 startups go bankrupt every year in Canada.
(The Balance Small Business)
96% of Canadian startups manage to survive the first year. 85% of them survive for three years, and 70% survive for five years.
Success Rate Startup Statistics
What is the average growth rate for startups? What are the most successful small businesses? What are the most profitable businesses in terms of net profit margin (NPM)? To these and many other questions, you’ll find the answers below if you keep reading.
24. Accounting, tax preparation, bookkeeping, and payroll services have an 18.4% net profit margin (NPM), making them the most profitable startups.
(Santa Barbara Score)
Other profitable industries for startups are:
- Management of enterprises and companies (15.5% NPM)
- Offices of real estate agents and brokers (15.19% NPM)
- Automotive equipment rental and leasing (14.55% NPM)
- Legal services (14.48 NPM)
- Offices of dentists (14.41% NPM)
- Electric power generation, distribution, and transmission (14.02% NPM)
- Lessors of real estate (14.01% NPM)
- Offices of other health practitioners (13.30% NPM)
- Offices of physicians (13.01% NPM)
- Commercial and industrial machinery and equipment rental and leasing (12.58% NPM)
- Religious organizations (12.41% NPM)
- Management, scientific, and technical consulting services (12.05% NPM)
- Specialized design services (11.4% NPM)
- Office administrative services (11.3% NPM)
25. The average growth rate for startup companies is 178% in revenues for their first year.
In their second year, the average growth rate is 100% in revenues and 71% for the third year. It’s important to note that growth rates for businesses vary by country, industry, and stage of development.
If you happen to be in an accounting business, here are some interesting (and potentially alarming) accounting statistics—technology threatens to replace 94% of auditors and accountants.
26. 58% of finance, real estate, and insurance businesses keep running after four years.
(Santa Barbara Score)
Finance, insurance, and real estate belong to the category of small businesses with the highest success rate.
27. Only two in five startups are profitable.
The stats show that less than 50% of startups are profitable. What’s more, one in three startups will either continue losing money or break even.
Getting familiar with the latest statistics about startups might be crucial for your future success. The startup success rate is greatly determined by the ability to learn from your mistakes and the mistakes other people made.
If you’re on a tight budget, consider investing in businesses with low startup cost such as content creation, personal or virtual assistance, event planning services, software training, music lessons, bookkeeping services, digital marketing services, online dating consulting, graphic design, and similar.
If you want to become a freelancer, one of the more interesting freelancing statistics to know is that 4% of freelancers earn between $51 and $100 hourly.
Regardless of the industry and startup type, following the latest trends will help you be at the top of your game. Good luck!