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40 Staggering Startup Statistics Everyone Should Know

by Nemanja Boskov
40 Staggering Startup Statistics Everyone Should Know -  Featured Image

Are you considering starting your own business? The idea of being your own boss is certainly a tempting one. Unfortunately, many people underestimate how difficult it can be to run a successful business.

That’s one of the reasons we’ve created this page. We’ve compiled a big list of startup statistics so that you can make an informed decision about whether or not this is the right move for you. We wanted you to have all the facts at your disposal.

We’ve scoured reputable sites for the real facts and figures. So shelve those preconceived notions—much of the commonly held wisdom regarding new businesses isn’t entirely correct.

Startup Stats for 2019 – Editor’s Choice

  • 45% of startups fold due to lack of capital or profitability.
  • 42% of startups fail because there’s no market.
  • There were 543,000 new businesses started per month in 2018.
  • Impact-driven founders are the most successful.
  • China accounts for the largest number of patents held worldwide.
  • 35% of workers in the United States are freelancers.
  • 40 venture capital-backed companies joined the ranks of “unicorn” in 2017.
  • 75% of the startups backed by venture capitalists fail.
  • Artificial intelligence startup funding increased from $1.7 billion in 2012 to more than $15 billion in 2017.
  • The robotics industries saw an increase of 1,400% in funding between 2012 and 2017.

General Startup Statistics

40 Staggering Startup Statistics Everyone Should Know - General Startup Statistics

1. China and the United States account for most of the highest value startups.

(Statista)

According to these startup statistics, these regions also have the highest levels of startup funding available. Entrepreneurs in these countries have ready access to alternative funding sources, such as venture capitalists, crowdfunding, and angel investors.

2. Startup funding grew by 50% across the board between 2012 and 2017.

(Statista)

This could also be a result of crowdfunding platforms gaining more traction. It should also be noted that the boom in the blockchain industry has significantly boosted these stats. The lack of regulation in the cryptocurrency space, and the tech itself, made it significantly easier for companies to access startup funding.

3. The robotics industries saw an increase of 1,400% in funding between 2012 and 2017.

(Statista)

Looking for the best startup industries? Robotics and advanced manufacturing are two industries that have grown exponentially over the last five years. It’s clear that we’re moving into a phase where robotics are becoming a lot more important in day-to-day living.

4. Artificial intelligence startup funding increased from $1.7 billion in 2012 to more than $15 billion in 2017.

(Statista)

Of course, with an increased interest in robotics, it makes sense that AI investment would show a serious increase as well. The advances in AI over the past few years have made it a useful commodity. Its practical application has also become more feasible, making it even more important to take note of the latest tech startup statistics and ideas.

Global Statistics

40 Staggering Startup Statistics Everyone Should Know - Global Statistics

5. The most active region for startups is the Caribbean and Latin America.

(Statista)

However, getting startup funding is more difficult in these regions. That’s why the United States and China have higher-value startups. Still, those in the Caribbean and Latin America have plenty of entrepreneurial spirit. About 33% of Ecuador’s population is involved with startups. In the States, only 13% of the population is.

6. Angola rates as the country with the highest rate of entrepreneurial activity.

(GEM Global Entrepreneurship Monitor)

The country’s workforce is comprised of 41% entrepreneurs according to the startup stats. This is pretty impressive considering that the country is classified as low income. In Guatemala, a middle-income country, the rate is 28%. In Chile, a high-income country, the rate is 25%.

7. In Qatar, Indonesia, Thailand, Panama, Angola, and Madagascar, entrepreneurial activity is evenly spread between the two sexes.

(GEM Global Entrepreneurship Monitor)

It may come as a surprise to Westerners that Qatar boasts an equal number of male and female entrepreneurs. The treatment of women in the Middle East may not be what most perceive.

8. Sweden, the Netherlands, and Poland rank as the countries easiest to open a business in.

(GEM Global Entrepreneurship Monitor)

The governments of these countries have attempted to remove as much red tape as possible. The startup statistics show that creating a business in these countries is easier than it is in others.

9. Media attention in South and East Asia is high when it comes to entrepreneurship.

(GEM Global Entrepreneurship Monitor)

As a result, entrepreneurial activity in these countries is higher. The media coverage showcases businesses, thereby demonstrating what steps would-be entrepreneurs should follow while also encouraging them.

10. Opportunities for entrepreneurs are considered the highest in Sudan, Angola, and Saudi Arabia.

(GEM Global Entrepreneurship Monitor)

Seven out of ten people in these countries believe that there are numerous opportunities available for them. At least three-quarters of respondents also felt that they’d successfully be able to make a go of starting a business.

11. Latin American entrepreneurs are the most fearless.

(GEM Global Entrepreneurship Monitor)

Fewer than a third of these entrepreneurs would let the fear of failure stand in their way if they saw a business opportunity. As for other countries, the startup stats indicate that only 17% of Angolans would put off starting a business due to fear of failure. Conversely, 64% of Moroccans would not start a business out of fear of failure.

12. IBM came in as the world’s most innovative company in the world in 2018.

(Fortune)

This is based purely on the number of patents held by the company. The company had a total of 9,100 registered at the end of 2018. Samsung came in second with 5,850 patents held. Canon came in third with 3,056 patents.

Startup Funding Stats

40 Staggering Startup Statistics Everyone Should Know - Startup Funding Stats

13. 40 venture capital-backed companies joined the ranks of “unicorn” in 2017.

(Forbes)

It seems that the venture capitalists are onto something. Each of these firms was valued at a minimum of a billion dollars in 2017 (the industry definition of “unicorn”). Naturally, not all VC-backed firms will be successful, but that’s a chance investors take.

14. The venture capital investment for startups reached $148 billion in 2017.

(Forbes)

That’s a record high for VC investments, and it shows that there’s general optimism in the industry overall. It’s hardly surprising. Thanks to new tech, businesses can get started on much lower budgets. Investors are all hoping to get in on the ground floor and find the next generation of unicorns.

15. 75% of startups backed by venture capitalists fail.

(Entrepreneur)

This makes sense, as well. VC investors are known to take big risks. The rewards are potentially great, but the risk of failure should also be taken into account. This also goes to show that throwing money at a problem isn’t always going to guarantee success.

Employees and Outsourcing Startup Jobs

40 Staggering Startup Statistics Everyone Should Know - Employees and Outsourcing Startup Jobs

16. 35% of workers in the United States are freelancers.

(Forbes)

Additionally, statistics on small businesses show that 42% employ freelancers. This is another reason that startups are able to run on a shoestring budget. By outsourcing functions to freelancers, companies save a substantial amount on company perks. Thanks to the tech available to us today, companies can access a pool of freelance talent globally. This gives these companies access to a wider range of necessary skills.

17. By 2020, 43% of the United States workforce will be comprised of freelancers.

(Forbes)

Startup statistics from 2019 show that over the last few years, there’s been an ever-increasing movement toward using remote workforces. Thanks to tech like Skype, and Google Drive, which according to Google stats has 1 billion users, employees are more capable of working remotely. By hiring remote workers, companies can reduce their overhead.

18. 10% of small business owners outsource their bookkeeping.

(Guidant Financial)

Again, the reason is that outsourcing saves some money, and America currently has 56.7 million freelancers. Business owners should look at how much they’re really saving by performing this function themselves. Are the records kept up to date? Are they able to gauge profitability? Do they know what they can claim during tax season?

19. In the United States, small businesses employ 47.8% of the workforce.

(Small Business Administration)

Around about half of the US workforce is employed in the small business sector. Startup stats show that these companies have a significant impact on the economy. It’s worthwhile to encourage entrepreneurs.

20. Most employees of small businesses will stick around for about four years.

(The National Small Business Association)

This statistic is another win. Generally speaking, it shows that small business owners are doing something right. At the same time, it’s a good idea to have an employee retention plan in place to further incentivize them to stay on.

 Startups and Their Intellectual Property

40 Staggering Startup Statistics Everyone Should Know -  Startups and Their Intellectual Property

21. China accounts for the largest number of patents held worldwide.

(World International Patent Organization)

In 2017, the total number of patents in China was 1,381,594. The United States came in second with 606,956, according to the latest business startup statistics.

22. The annual number of patent applications increased from 997,501 in 1990 to 3,168,900 in 2017 globally.

(World International Patent Organization)

It’s no secret that technology has been growing exponentially. This could account for the massive increase in patents over the last twenty years or so. Think about it—our world has changed substantially since 1990, just on a technological level.

23. Patent applications are highest in the digital communications field.

(Statista)

Coming in a close second are patent applications in the field of computer technology. The electrical machinery apparatus and energy field comes in third place.

24. The United States patent application process isn’t geared toward new players.

(World International Patent Organization)

Authorities have been tweaking the process to make it simpler. The small business and startup statistics show that they’re falling behind, though. China has doubled the number of patents on record. The Chinese patent office has seen 43,091 PCT applications in 2016. Even though the United States had more applications during the same period (56,594), this number has decreased compared to 2015.

25. 38.2% of the US’s GDP is comprised of intellectual property.

(The United States Patent and Trademark Office)

This adds up to a whopping $6 trillion a year. Does this indicate that innovation in the States is greater than the rest of the world? It might, but it could also indicate that startup funding in the United States is a lot higher.

26. More is spent on intellectual property protection in the United States than anywhere else.

(World International Patent Organization)

The $6 trillion spent on intellectual property in the United States is higher than the GDP of most other nations. The only country that has a GDP higher than this amount is China.

Startup Failure Rate Statistics

40 Staggering Startup Statistics Everyone Should Know -  Startup Failure Rate Statistics

27. 45% of startups fold due to lack of capital or profitability.

(GEM Global Entrepreneurship Monitor)

This seems to indicate that entrepreneurs are moving forward too fast. Perhaps they’re overestimating the value of their product or service. Or perhaps they aren’t doing enough research ahead of time.

28. Only 56% of startups will make it through to their fifth year.

(United States Bureau of Labor Statistics)

Commonly held wisdom states that the first year is the toughest for startups. The statistics paint a different picture. 80% of the businesses started in 2014 made it through the first year. So while the first year is an adjustment, it may not rank as the most difficult. That’s why it’s essential to come up with a five-year plan before starting out.

29. 80% of businesses will make it through their first year.

(United States Bureau of Labor Statistics)

So what percentage of new businesses fail in the first year? The good news is that only 1 out of 5 businesses will fail shortly after starting out. Obviously, it’s still a struggle for a business to properly establish itself.

30. 42% of startups fail because there’s no market for them.

This is clearly an issue that stems from poor research upfront. It’s critical to do copious amounts of market research before starting out. Is there really a market for the product or service you want to sell? Is there someone out there offering a better solution? And if not, is there one offering a passable solution? People are loath to adopt new things.

Source: CB Insights 

31. 29% of startups fail because of monetary problems.

(CB Insights)

Many entrepreneurs make the mistake of thinking that their business will be an overnight success. Startup failure rate statistics paint a less rosy picture. A new business will typically need to run for at least a year before it starts to show a real profit. In the interim, all existing funds must be reinvested to build the business.

32. 23% of startups fail because they have the wrong team.

(CB Insights)

Many startups fail because they don’t hire the right people for the job. This could, in part, be a result of business owners trying to cut costs by doing everything themselves. How do you succeed in startups? By starting out with a carefully chosen team.

33. Business services and food and restaurant services accounted for the highest number of startups in 2018.

(Guidant Financial)

In 2018, business services and food and restaurant services were the two most popular industries. Each category made up 11% of the total number of small businesses starting up. The beauty, health, and fitness category came in a closely after them and comprised 10% of the overall number of startups.

34. 26% of business owners start a new business because they want to be their own boss.

(Guidant Financial)

Most of us can relate to this. It should be noted that being your own boss might not be all it’s cracked up to be. You’re getting all the profit, but you’re also the one who has to deal with all the expenses and stress.

35. There were 543,000 new businesses started per month in 2018.

(Yahoo)

Wondering how many new businesses started in 2018? The answer is around six and a half million. The number of businesses that closed down was unfortunately higher than that, so the net total of all business actually dropped.

36. 53% of business owners cite the cost of health insurance as a significant concern for their business.

(Small Business Trends)

Business owners want to offer benefits in order to attract the very best staff. The problem, though, particularly in the States, is that health insurance works out very expensive.

37. 32% of business owners in 2017 rely on their business earnings for financing.

(The National Small Business Association)

This points to a good outlook for businesses. It shows that around a third of all businesses can function without outside financing.

38. 31% of businesses used credit card financing in 2017.

(The National Small Business Association)

Startup statistics like this one may be cause for concern. Credit card financing is generally easier to get and more convenient. It’s also an expensive way to fund business expenses. As a new business, the impact of the interest must be considered.

39. 31% of businesses say that they’re unable to expand due to capital constraints.

(The National Small Business Association)

Getting your business to turn a profit is one thing. Being able to afford to expand the business is quite another. Again, it’s wise to carefully consider the impact of expansion on profitability before jumping in too eagerly.

40. Impact-driven founders are the most successful.

(Entrepreneur)

Studies of profitable startups have shown that having an impact-driven founder is essential. The commitment and passion that it takes to persevere and get the business up and running should never be underestimated. It’s going to mean a lot of work and tenacity to really make your business a success.

Final Notes

That’s a wrap. As you’ll no doubt have noticed, there are a lot of misconceptions out there when it comes to startups. When starting your own business, it’s always best to rely on the verified startup statistics rather than hearsay. While a lack of capital is a big deal for startups, it’s also essential to pay attention to the ways you cut costs, who you’ve chosen for your team, and how you’ve protected your intellectual property.

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1 comment

Priya September 9, 2019 - 12:44 pm

Great article thanks for sharing.

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