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30 statistics explain struggles and success of Startups

Posted on September 14, 2015 by Rob Petersen

 

 

Startups

Few accomplishments in business are as gratifying as having an idea for something that didn’t exist before turn into a success through hard work, perseverance and smart decision making.

We (BarnRaisers) get approached by Startups for marketing services, as a full service digital marketing agency that builds brands with proven relationship principles and ROI; perhaps more than most businesses.

We’ve been inspired by Startups’ success but also know the many struggles. We admire people who follow their passions but have to make decisions knowing the realities. What have we learned?

Here are 30 statistics to explain struggles and success of Startups.

LIKELIHOOD OF SUCCESS: Most won’t make it, but those who listen to change, remain flexible and know how to recover have a much better chance.

  • 90% of Startups fail (Mashable)
  • 74%, failed due to premature scaling. Premature scaling means spending money on marketing, hiring etc. either before you found a working business model (Quora)
  • 62% of Startups fail due to co-founder conflicts (Funders and Founders)
  • 52% are less likely to scale prematurely if the startup has “pivoted” once or twice (Quora)
  • 50% face development problem (Five for Focus)
  • 45% close their doors in six months (Five for Focus)
  • 42% identified “lack of a market need for their product” as the single biggest reason for their failure (Forbes)
  • 30% struggle with time issue (Five for Focus)
  • 30% fail because their management was not experienced enough to handle finances, hiring and marketing (Entrepreneurial Insights)
  • 20% find their hang-up in sales and marketing
  • 10% of Startsups succeed because they listen to change, stay flexible and know how to recover. (Forbes)
  • Customized eCommerce, Education Technology, Mobile App Development, Green Technology and Wearable Technology are areas where Startups that are expected to surge (Mashable)

FOUNDERS: Two heads are generally better than one. Experience counts, even if the experience at the previous Startup wasn’t a good one. A good VC firm can increase the chances of success.

  • 80% and successful Startups have multiple founders (VC Josh Hannah)
  • 68% of founders believe the odds of their succeeding are better than others in their sector (Harvard Business School)
  • 48% of founders are between 35-44 (Gist)
  • 29% are between 26-34 (Gist)
  • 39% have experience as a Founder/CEO of another Startup (Mashable)
  • 20% of founders who have failed on their first Startup, succeed on their second (Quora)
  • 10% of first time founder succeed (Quora)
  • Failed entrepreneurs who are funded by experienced VC firms have a 22.1% chance of succeeding (OnStartups)
  • First-time entrepreneurs have a 17.6% chance of succeeding when funded by more experienced VC firms (OnStartups)
  • Only 8% are female founders and 92% are male founders (Founder’s Guide)
  • Founders could be making no salary to salaries that are competitive with other industries (Quora)

FUNDING: Only a small percentage of startups are funded by VC’s; most are self-funded.

  • Only 1% of funding for Startups comes from VC firms (Entrepreneur)
  • 3% comes from Crowdsourcing (Entrepreneur)
  • 3% comes from banks (Business Ideas Lab)
  • 24% comes form friends and family (Entrepreneur)
  • 41% are funded by loans (Entrepreneur)
  • 41% are funded by lines of credit (Entrepreneur)
  • 80% are self-funded (Entrepreneur)

Many Startups start with less than 5 employees according to Nathan Therrian, a benefits broker for startups. So a lot of work and responsibility is generally spread across a small number of people.

If you need more information to make your decision about working with or at a startup, there are some good Infographics on startups. Below is one of them.

Did this explain struggles and success of Startups for you? Did it inspire or discourage you? Or give you a perspective that you needed?

Startups infographic #1

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