Starting your own business can be rewarding. But it also brings many challenges, from targeting the right market to finding the right marketing strategies. To help inspire your journey, here are 27 startup statistics, from how many startups fail or succeed to how they get funded and which industries have the most startup activity.
General Startup Statistics
Startups are known to have high mortality rates. However, they continue to make up a significant portion of the world’s economy, with new startups being created daily for everything from solutions that fill gaps in the marketplace to entrepreneurial passion projects. The stats below reflect general startup business statistics worldwide and underscore their growing value in the global economy.
1. The most valuable startup company in the world is worth $225 billion
If there’s one startup that’s been on an unrelenting rise over the past decade, it’s ByteDance, the tech startup behind the now-ubiquitous TikTok. The China-based company, which only started in 2012, is now the highest-valued startup in the world with $225 billion in value—well past the $1 billion “unicorn” mark. The company’s meteoric rise was the outcome of many well-placed factors, from good timing to strategic acquisitions and product innovations.
Whatever your startup’s goal is, one thing’s clear: It takes the right combination of audience, timing, product quality, and good company strategy to lead your business to success.
2. 305 million startups are created globally each year
Startups are a steadily growing sector of the economy, with global startup statistics rising every year across industries. As of 2022, 305 million startups are created each year worldwide. Of that number, only a few eventually become profitable, and most take several years of planning and trial-and-error before they do so.
While it’s easy to get overwhelmed with the millions of startups created every year, don’t be discouraged: do intensive research and planning, and learn and recalibrate your strategies along your startup journey.
3. Around 3.2 million startups are created each year in the US
Thousands of new startups and businesses are created every day, and in the US, an average of 3.2 million startups are built each year. Over the past decade, the number of new startups grew most in 2021, with approximately 5.4 million new startups created that year.
4. 15% of the world’s GDP comes from digital businesses
Many startups and companies are using digital systems to transform their businesses, whether to improve efficiency, create better customer experiences, or stay ahead of competitors. In fact, according to the World Economic Forum, 15% of the world’s GDP today comes from digital economies.
5. 84% of small businesses use at least one digital platform for customer communication
Digitalization has opened up new avenues for communication and marketing. Small businesses are no exception: in 2021, 84% of small businesses used at least one major digital platform to communicate with their customers. This comes as no surprise, as many of today’s consumers are active on multiple digital platforms and rely on the internet to gain information, which offers ample opportunities to convert them into customers.
6. Startups create approximately 2.96 million new jobs each year
Startups are a steadily growing sector of the economy, and one reason they’re valuable is that they open up new avenues for employment and can even create entirely new jobs. While this figure depends on how many startups are created each year in the US, startup statistics from Statista found that startups produced an average of 2.96 million new jobs each year.
Startup Success and Failure Statistics
Hundreds of millions of startups are created worldwide each year—some flourish while others fail. Building brand presence and startup success entails a lot of intensive research, planning, and trial-and-error, and the lack thereof can eventually lead to startup failure. Keep reading to learn the startup success stats as well as startup failure statistics, and the causes behind them.
7. 90% of startups fail
Startups fail due to myriad reasons, from insufficient funding to ineffective marketing strategies, or a combination of several factors. As of 2022, the failure rate of startups was a jaw-dropping 90%. Other causes for startup failure are low market demand or a lack of product-market compatibility, stiff competition with other companies offering similar products or services, or a lack of passion within the team. Another major contributor is failure to follow an effective startup marketing strategy.
8. An average of 20.5% of startups fail in their first year
On average, the startup failure rate by stage is lowest in the first year. According to startup business statistics from the US Bureau of Labor, a mere 20.5% of startups fail in their first year, while that figure gradually increases with each passing year. Reasons for startup failure range from lack of funding and wrong timing to insufficient audience research, among others.
Key takeaway: A large part of a startup’s success hinges on intensive planning, market research, and budgeting. As a business owner, it’s essential to set clear goals and extensively research everything from identifying customer personas to developing marketing strategies.
9. The main reason startups fail is lack of funding
Beyond knowing how many startups fail, it’s equally essential to know the primary reasons why they do. According to a 2022 survey, 47% of startups failed because of a lack of funding or investment. Meanwhile, 44% of founders stated that their venture failed after eventually running out of cash, while others still cited the COVID-19 pandemic (33%) and poor timing (21%) as their main reason for startup failure.
10. First-time startup owners have a success rate of 18%
While a considerable number of startups fail, that shouldn’t discourage you from trying. According to startup statistics from the United States Bureau of Labor Statistics, first-time founders have a startup success rate of 18%. These founders usually have relevant experience in their startup industry and successfully meet their customers’ needs.
Pro Tip: Having the right strategy in place can make or break your startup. Get your digital marketing strategy started on the right track with a service like Straight North, whose branding and marketing services make it our top pick for the best startup marketing agency.
11. Information startups have the highest startup failure rate at 26.4%
Information startups, including those in telecommunications and customer service, have the highest startup failure rate by industry, making up 26.4% of all startups that fail in their first year. This is closely followed by professional, scientific, and technical services with a failure rate of 23.4%, as well as startups in administrative and waste services.
12. 5 out of the 10 most successful startups are in the internet sector
Stripe, SHEIN, Canva, Checkout.com, and Databricks—aside from being among the top 10 most successful startups in the world, one thing all five have in common is being internet-based. Out of the 10 highest-valued startups in the world, half are in the internet sector, whether they center on commerce, creative services, or data management.
Pro tip: Whatever industry you’re in, getting your business on the internet is vital to your success, with 97% of customers learning about businesses online. Find our more important website statistics for your business.
Startup Business Statistics on Funding and Investment
One of the most vital parts of building any startup is its funding. Without a stable income stream, early-stage startups have to rely on other funding sources, whether private investors or personal savings. These funds are used for everything from product materials to online advertising. Below are some of the most relevant startup funding statistics, including financing, costs, and profit.
13. Small business owners (SBOs) spend an average of $40,000 in the first year
From product materials and operations to shipping and marketing costs, small business owners (SBOs) spend an average of $40,000 in their first year of running a business. This includes costs for product development and business operations, shipping expenditures such as packaging and couriers, costs for building an online presence (including domain hosting and the like), staff salaries, and offline logistical needs such as rent and gas.
14. 66% of SBOs use personal savings to fund their businesses
According to a study by ecommerce platform Shopify, 66% of small business owners use their personal savings as their primary source of funding when starting a business. Many also reinvest their revenue back into their business—in fact, 30% cited their reinvestments as their primary funding source. Meanwhile, 23% cited financial support from other sources (such as family and friends) as their main funding source, while 21% took out personal loans.
15. Most small businesses cost an average of $75,800 to start
While each small business has its own needs and priorities, the cost to start a business averages at $75,800. However, this can differ depending on the kind of business you’re launching. Online stores can cost significantly less, while brick-and-mortar businesses can cost anywhere near $100,000, and mobile businesses just under that number.
These costs cover everything from market research and insurance fees to employee, advertising, and equipment costs, all of which apply to businesses in any industry. While this money could come from savings, credit cards or investors, many entrepreneurs also use 401(k) investments to start a business.
16. Product development is the No. 1 cost for small businesses
At 31.6%, product development costs take up the largest portion of an SBO’s budget, including costs for raw materials and supplies (among others). Staffing costs are the second-largest budget portion at 18.8%
Costs for building an online presence, like domain hosting and local SEO, consume a mere 9%. Other expenses include logistical needs like gas and rent and marketing and local advertising efforts like print ads and events.
Key takeaway: As part of your overall business plan, effective budget planning involves designating budget allocations for the various parts of your operation. This ensures that all essential parts of your business have the resources needed to help you grow to the next level.
17. Only 40% of startups are profitable
Part of what determines a startup’s success is its profitability, which is achieved by a combination of market-product compatibility and effective marketing. Around 40% of all startups achieve profitability in their lifetime. Out of the remaining 60%, 30% continue to lose funding, while the remaining 30% eventually fail.
18. Startups take an average of 2-3 years to become profitable
Startups have multiple levels of profitability, and how long it takes for a startup to turn a profit depends on several factors. Startup statistics show that it takes an average of two to three years to turn a profit. Also, it’s not unusual for startups to spend the first year spending money on various expenses that can’t be recouped until the second year. However, most start making a profit by the second or third year.
19. Startup funding decreased by 35% in 2022
While the pandemic initially brought in record numbers in startup funding in 2021, that rate has since slowed down, according to recent data. A study by CB Insights found that funding for startups in 2022 totaled just over $415 billion, 35% lower than in 2021. Numbers remained similar in the US, with the study also finding a 37% drop in funding for US-based startups.
20. Funding for generative artificial intelligence (AI) startups increased by 52% in Q1 2023
While startup funding is generally decreasing, generative artificial intelligence (AI) companies like ChatGPT and Copy.ai are in their heyday and enjoying more demand than ever. According to Pitchbook, funding for generative AI startups reached nearly $1.7 billion in the first quarter of 2023, a 52% increase from just $820 million in Q1 of 2022. Meanwhile, investors are also seeing up to 80% more pitches from AI startups.
21. Most business founders only spend 89% of their planned budget
Somewhat surprisingly, startup business statistics show that business owners tend to overestimate how much business funding they need. Whether for online, mobile, or brick-and-mortar stores, business founders spend only 89% of their planned budget on average. The discrepancy is larger for online stores, while for mobile and physical stores is only slight.
Startup Statistics by Industry
While new startups are created every day in virtually every industry, some find more success than others. This is especially true for the tech industry, which has produced some of the world’s most successful startups, thanks in part to its many sub-industries, from FinTech to Software & Data. Check out some of the relevant industry-specific startup business statistics below.
22. Tech startups grew 2.3x more than non-tech startups during the pandemic
The COVID-19 pandemic undeniably transformed how many businesses and industries operate, and startups are no exception. According to a 2022 study, startup trends for tech accelerated by 2.3 times over the pandemic, far higher than those in other industries. This growth is partly due to the accelerated digitization brought on by pandemic lockdowns and a continually rising interest in deep tech areas like digital finance, Web3, and the like.
23. Applications for retail trade grew by 74% in 2021
The number of new businesses and startups continued to grow throughout the pandemic. In fact, retail trade applications increased by 74% in 2021, higher than pre-pandemic figures. A foremost reason for this was the accelerated digitalization brought on by the pandemic, giving retail businesses ample opportunities to increase reach and sales on the online market.
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24. Funding for the blockchain industry grew by 91% in 2022
In line with the steady growth of the tech startup ecosystem, blockchain startups saw the highest increase in funding, growing by 91% in 2022. This is followed by manufacturing and robotics at 70% and FinTech at 67%. In contrast, funding for digital media and advertising technology decreased over the past five years, dropping by 27% and 29%, respectively.
25. 31.8% of all startups are in the software or data industry
While the number of startups in the US increases yearly, the sector that grows the most is the software and data (e.g., business intelligence or BI) industry. Software and data startups account for 31.8% of all startups worldwide, ranking higher than Healthtech, Social & Leisure, and FinTech.
Software and data startups deal with integrating technology into data processing systems for overall improvement. This includes everything from cloud analytics and database management to marketing data, among others—all of which have been on the rise in recent years. While these startup statistics point to a bigger target market, it also means stiffer competition.
26. Out of all startups, 1.35 million are technology-related
While FinTech accounts for the largest percentage of all startups, it’s merely a segment under a larger industry: technology. Of all startups worldwide, 1.35 million are technology-related. Besides FinTech, other tech-related startups include healthcare and life science tech, advertising tech, artificial intelligence (AI), clean technology (CleanTech), Blockchain, cybersecurity, robotics, and agricultural technology.
27. 31% of generative AI startups are for creating visual media
While generative AI is steadily booming, one particular area under it that investors are most interested in is visual media. According to studies, the AI startups that receive the most funding from investors are in visual media, such as AI photo and video editing tools, AI avatars, motion capture, and more. These startups received 31% of all generative AI startup funding—more than startups for AI text, code, speech & audio, and generative interfaces.
Frequently Asked Questions
Around 10% of startups eventually find success. These startups can come from all industries. However, most successful startups come from the technology and communications industries. The most successful startups also reach unicorn status by reaching the $1 billion value mark.
Ultimately what makes a successful startup, meaning it can produce the revenue needed to sustain and grow operations. This entails everything from finding the right product-market fit and reaching its target audience to proper budget, resource planning, and building brand presence in the marketplace.
Most startups fail because of an incompatibility between their product or service and the needs of their target market. Many startups also end up failing due to an eventual lack of funds, improper marketing strategies, legal issues, or problems in technology or operations.
Bottom Line
While there are no official roadmaps for building a successful startup, these startup statistics show a few best practices remain true. For the best chances of startup success, do intensive market research and planning, create a product or service that addresses your target market’s problems, set clear goals, create a budget plan, and develop a sound marketing strategy.
