Introduction

Startup Failure Rate Statistics: Launching a new business can be both exciting and promising, but it also comes with its share of ups and downs. Understanding the reasons behind startup failures can help aspiring entrepreneurs navigate challenges more effectively. By analyzing data on these failures, entrepreneurs can develop strategies to mitigate risks and create adaptable business plans that increase their chances of success.

This article presents statistics on startup failures, highlighting what potential new businesses may encounter and how to prepare for these challenges. Being informed, developing a clear strategy, and stepping out with confidence are essential for overcoming obstacles in the entrepreneurial journey.

As of 2020, the average startup failure rate in Africa stood at ** percent. However, the rate differed across countries. In Ethiopia and Rwanda, ** percent of the startups ceased operations, while Kenyan startups had a failure rate of ** percent in the same year.

In 2020, the average two-year fail rate was lower for Black and Latinx women-led startups than it was for startups overall in the United States. The national fail rate for startups in the U.S. sat at 40 percent in 2020, significantly higher than the 27 percent average fail rate for Black and Latinx female-led startups. The venture funding raised by Black and Latinx female-founded startups more than tripled between 2018 and 2020, but still only accounted for a fraction of all capital raised.

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In 2020, approximately 66.2 percent of newly established businesses in South Korea failed to continue operations after five years. This was highest among arts, sports and recreation-related services as well as accommodation and food services. The 5-year survival rate stood at 33.8 percent, which was notably lower than the OECD average of 45.4 percent.

According to the survey carried out among start-up owners, the main reasons why their businesses did not work out was a lack of financing, with nearly half percent of the start-ups giving this as the main reason for their business failure. Moreover, the COVID-19 pandemic played a role in one third of business failures. There is rarely one reason behind a company going bankrupt, it is rather a mixture of several issues, as reflected in the many reasons stated by the respondents.

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Success.ai’s Startup Data with Contact Data for Startup Founders Worldwide provides businesses with unparalleled access to key entrepreneurs and decision-makers shaping the global startup landscape. With data sourced from over 170 million verified professional profiles, this dataset offers essential contact details, including work emails and direct phone numbers, for founders in various industries and regions.

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Context A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship includes all new businesses, including self-employment and businesses that do not intend to go public, startups are new businesses that intend to grow large beyond the solo founder. In the beginning, startups face high uncertainty and have high rates of failure, but a minority of them do go on to be successful and influential.

Content The following dataset has data about the Top 300 startups in India. Details about the columns are as follows:

Company - Name of the Startup. City - The City in which the startup is started. Starting Year - The Year in which the startup was started. Founders - Name of the founders of the startup. Industries - Industrial domain in which the startup falls. No. of Employees - Number of employees in the startup. Funding Amount in USD - Total funding amount funded to the startup. Funding Rounds - Funding rounds are the number of times a startup goes back to the market to raise more capital. The goal of every round is for founders to trade equity in their business for the capital they can utilize to advance their companies to the next level. No. of Investors - Number of investors in the startup.

Original Data Source: Indian startups

Analysis of ‘Startup Success Prediction’ provided by Analyst-2 (analyst-2.ai), based on source dataset retrieved from https://www.kaggle.com/manishkc06/startup-success-prediction on 28 January 2022.

--- Dataset description provided by original source is as follows ---

Context

A startup or start-up is a company or project begun by an entrepreneur to seek, develop, and validate a scalable economic model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend to become registered, startups refer to new businesses that intend to grow large beyond the solo founder. Startups face high uncertainty and have high rates of failure, but a minority of them do go on to be successful and influential. Some startups become unicorns: privately held startup companies valued at over US$1 billion. [Source of information: Wikipedia] https://images.unsplash.com/photo-1556761175-5973dc0f32e7?ixlib=rb-1.2.1&ixid=eyJhcHBfaWQiOjEyMDd9&auto=format&fit=crop&w=500&q=60" alt="startup image"> Startups play a major role in economic growth. They bring new ideas, spur innovation, create employment thereby moving the economy. There has been an exponential growth in startups over the past few years. Predicting the success of a startup allows investors to find companies that have the potential for rapid growth, thereby allowing them to be one step ahead of the competition.

Objective

The objective is to predict whether a startup which is currently operating turns into a success or a failure. The success of a company is defined as the event that gives the company's founders a large sum of money through the process of M&A (Merger and Acquisition) or an IPO (Initial Public Offering). A company would be considered as failed if it had to be shut down.

About the Data

The data contains industry trends, investment insights and individual company information. There are 48 columns/features. Some of the features are:

• age_first_funding_year – quantitative
• age_last_funding_year – quantitative
• relationships – quantitative
• funding_rounds – quantitative
• funding_total_usd – quantitative
• milestones – quantitative
• age_first_milestone_year – quantitative
• age_last_milestone_year – quantitative
• state – categorical
• industry_type – categorical
• has_VC – categorical
• has_angel – categorical
• has_roundA – categorical
• has_roundB – categorical
• has_roundC – categorical
• has_roundD – categorical
• avg_participants – quantitative
• is_top500 – categorical
• status(acquired/closed) – categorical (the target variable, if a startup is ‘acquired’ by some other organization, means the startup succeed)

Acknowledgements

• I would like to thank Ramkishan Panthena, for providing us this dataset. He is a Machine Learning Engineer at GMO.
• This dataset was used in data sprint #5 at DPhi.

Inspiration

Predicting the success of a startup allows investors to find companies that have the potential for rapid growth, thereby allowing them to be one step ahead of the competition.

--- Original source retains full ownership of the source dataset ---

Access Venture Capital (VC) Funding Data for startups worldwide with Success.ai. Includes verified leadership profiles, funding histories, and investor insights. Continuously updated datasets. Best price guaranteed.

Almost one in five new businesses in the European Union failed in their first year according to the one-year business survival rates in the European Union for 2018. In this year, the country with the highest business survival rate was Greece, which had a one-year survival rate of 96.7 percent, while Lithuania had the lowest at 63.57.

The paper deals with the potential relationship between higher education and entrepreneurial activities. Universities and other higher education institutions could be seen as boosting entrepreneurship in the region. University graduates could be more often involved in starting up a new business and the university itself could commercialize their innovations by creating academic spin-off companies. The paper aims to examine the potential effect of higher education on the probability of starting a business as well as its further success. Based on the data for 40 EU and non-EU countries, retrieved from a Eurobarometer survey, we conducted probit and IV probit regressions. These have tested the assumed relationship between higher education and entrepreneurial activities. Our results strongly suggest that higher education can often be very beneficial for starting up a new business and this seems to be one of the factors determining the success of new businesses. Furthermore, those respondents who attended courses related to entrepreneurship appear to be more active in starting-up a business and this seems to be also positively correlated with the company's future success. Interestingly, university graduates from Brazil, Portugal and India in particular, tend to appreciate the role that their universities have played in acquiring the skills to enable them to run a business.

Startup Accelerator Market size is growing at a moderate pace with substantial growth rates over the last few years and is estimated that the market will grow significantly in the forecasted period i.e. 2023 to 2031.

Global Startup Accelerator Market Drivers

The market drivers for the Startup Accelerator Market can be influenced by various factors. These may include:Increased Entrepreneurial Activity: With more individuals looking to start their own businesses, there is a greater demand for support and resources provided by startup accelerators.Access to Funding: Accelerators often provide crucial early-stage funding, making them attractive to startups that need capital to grow and scale their operations.Mentorship and Networking Opportunities: The value of mentorship, industry connections, and networking events hosted by accelerators can significantly boost a startup’s chances of success.Rapid Technological Advancements: As new technologies emerge, accelerators provide the necessary ecosystem to quickly adapt and integrate these advancements into startup models.Corporate Innovation: Large corporations sponsoring or partnering with accelerators to foster innovation, stay ahead of industry trends, and cultivate potential acquisition targets.Government Support and Policies: Government initiatives and favorable policies aimed at fostering innovation and entrepreneurship encourage the growth of startup accelerators.Increased Market Competitiveness: As competition intensifies across industries, startups need access to the resources and strategic guidance provided by accelerators to survive and thrive.Globalization and Market Expansion: Accelerators help startups navigate international markets and scale their businesses globally, appealing to those looking to expand beyond their local market.Improved Success Rates: The structured programs and support mechanisms of accelerators often lead to higher success rates for startups compared to those that go it alone.Diversity and Inclusion Initiatives: Growing emphasis on diversity and inclusion in entrepreneurship encourages the development of accelerators that focus on supporting underrepresented groups.Data-Driven Decision Making: The support for data-driven decision-making tools and metrics provided by accelerators helps startups make informed choices, increasing their likelihood of success.Community and Ecosystem Support: Accelerators play a crucial role in building entrepreneurial communities and ecosystems, which can provide long-term support for startups.

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Success.ai provides unparalleled access to Venture Capital Funding Data, meticulously curated to support organizations in identifying, connecting with, and analyzing global venture capital professionals. Our robust database includes verified profiles of VC analysts, fund managers, investment partners, and other key decision-makers. With AI-driven validation, continuously updated data, and extensive global coverage, our solutions empower businesses to excel in fundraising, partnership development, and strategic investment decisions.

Key Features of Success.ai's Venture Capital Funding Data:

Global Reach: Access profiles of venture capital professionals across 250+ countries, representing the world’s leading VC firms and emerging funds.

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Industry-Specific Data: Tailored to industries such as technology, healthcare, renewable energy, e-commerce, and more, ensuring highly relevant data for targeted outreach.

Real-Time Accuracy: Our AI-driven systems continuously update datasets to ensure a 99% accuracy rate, delivering the most reliable and actionable insights for your needs.

GDPR-Compliant Data: Fully compliant with global data privacy standards, ensuring ethical and legal usage across all business practices.

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Plan targeted events or outreach campaigns by accessing detailed data on VC professionals in your target sectors and regions.

APIs to Supercharge Your Outreach:

Enrichment API: Keep your systems up-to-date with real-time data enrichment, ensuring your VC contact lists remain accurate and actionable.

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With Venture Capital Funding Data, Success.ai empowers you to connect with the right investors, streamline your fundraising efforts, and gain unparalleled insights into the global VC ecosystem. Whether you’re a startup founder, corporate executive, or investment professional, our data solutions provide the tools you need to succeed.

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This statistic shows the success rate of crowdfunding campaigns for startups in South Korea in 2017. During the measured period, the success rate of startup crowdfunding in South Korea stood at 65 percent.

Entrepreneurial ventures are established in large numbers in China. The success rate of these entrepreneurial ventures is lower than that of new startups. Mismanagement and a lack of creative skills among entrepreneurs are cited as reasons for entrepreneurial failure in China. The current study investigates the impact of entrepreneurial networking and new venture intention on entrepreneurial success in China, with psychological capital and entrepreneurial optimism serving as moderators. 483 responses were collected from business students in China for data analysis. The findings of the study reveal that the impact of entrepreneurial networking and new venture intention on entrepreneurial success in China, with the moderating role of psychological capital and entrepreneurial optimism, is significant. The theoretical framework of this research has novelty as it introduces new moderating relationships of psychological capital and entrepreneurial optimism in the model of entrepreneurial success. Practically, this study has revealed that entrepreneurial success can be achieved with entrepreneurial networking, entrepreneurial optimism, psychological capital, and new venture intention. The directions of this research point out additional gaps in the literature that scholars should discuss in subsequent studies.

According to Cognitive Market Research, the global Venture Capital Market size is USD 309541.2 million in 2024. It will expand at a compound annual growth rate (CAGR) of 5% from 2024 to 2031.

North America held the major market share for more than 40% of the global revenue with a market size of USD 123816.48 million in 2024 and will grow at a compound annual growth rate (CAGR) of 3.20% from 2024 to 2031.
Europe accounted for a market share of over 30% of the global revenue with a market size of USD 92862.36 million.
Asia Pacific held a market share of around 23% of the global revenue with a market size of USD 71194.48 million in 2024 and will grow at a compound annual growth rate (CAGR) of 7.00% from 2024 to 2031.
Latin America had a market share of around 5% of the global revenue with a market size of USD 15477.06 million in 2024 and will grow at a compound annual growth rate (CAGR) of 4.40% from 2024 to 2031.
Middle East and Africa had a market share of around 2% of the global revenue and was estimated at a market size of USD 6190.82 million in 2024 and will grow at a compound annual growth rate (CAGR) of 4.70% from 2024 to 2031.
Local investors have the highest Venture Capital Market revenue share in 2024.

Market Dynamics of Venture Capital Market

Key Drivers for the Venture Capital Market

Increasing Number Of High-growth Startups Seeking Funding Drives Market Growth

The increasing number of high-growth startups seeking funding is significantly fueling the demand for venture capital. As entrepreneurial ventures increase, driven by innovative ideas and disruptive technologies, there is a corresponding surge in the need for substantial capital to scale these businesses. Startups, particularly in tech-driven and emerging sectors, are experiencing rapid growth and require substantial financial backing to expand operations, develop products, and capture market share. Venture capital firms are uniquely positioned to meet this demand, offering not only the necessary funding but also strategic guidance and networking opportunities essential for startup success. This dynamic creates a symbiotic relationship where startups gain the resources they need to thrive while venture capital firms benefit from high-potential investment opportunities. The robust pipeline of ambitious, high-growth startups thus acts as a catalyst, driving sustained interest and investment activity in the venture capital market, further enhancing its growth and development.

Rising Global Entrepreneurship Rates Increases Market Demand

Rising global entrepreneurship rates are significantly driving the need for venture capital to support new businesses. As more individuals worldwide pursue entrepreneurial ventures, the demand for substantial financial resources to transform innovative ideas into viable businesses is escalating. This entrepreneurial surge is particularly evident in emerging markets where access to traditional funding sources is limited. Venture capital firms play a crucial role in bridging this funding gap, providing not only the capital necessary for startup growth but also offering strategic guidance and valuable industry connections. The increased global entrepreneurial activity creates a fertile environment for venture capital investments, as these new businesses often have high growth potential and the ability to disrupt established industries. Consequently, the proliferation of entrepreneurial ventures worldwide underscores the critical role of venture capital in fostering innovation, driving economic growth, and supporting the next generation of successful businesses. This trend is a key driver behind the expanding venture capital market, emphasizing its importance in the global economy.

Restraint Factor for the Venture Capital Market

High Risk Of Failure Among Startups To Hinder Market Growth

The high risk of failure among startups is a significant factor restraining the growth of the venture capital market. Despite the allure of high returns, the inherent uncertainty and volatility associated with early-stage companies present considerable challenges for venture capitalists. Many startups fail to achieve profitability or even reach the market, often due to reasons such as insufficient market demand, operational inefficiencies, or competitive pressures. This high failure rate can lead to substantial financial losses for investors, reducing their willingness to commit capital to ...

Only **** percent of businesses in the United States founded between March 2013 to March 2023 were still operating in March 2023. By 2018, around half of such U.S. businesses had still survived.