Well, the numbers don’t lie, even if there are several sources of these statistics. Starting a company is HARD – in so many ways. And risky too. Let’s delve into the true chances of your startup success.
Let’s start with a restaurant – not our thing. But…
I read several years ago that the average startup restaurant lasts only about a year. Ouch! Here I am a professional investor in early-stage companies, and I attempt to find those with the greatest chance of success and growth in value over time. Restaurant startups would not top my list.
Data does not lie
We have years of real data to call upon: data that impacts both investors and entrepreneurs. There are two reliable sources of reasonably recent data for us to examine. The Angel Capital Association recently published a study contributed to by several of my friends quoting that seventy percent of investments made by angel investors to date return less than the amount invested – upon a sale or closing of the business – the great majority of these outright losses as businesses die.
Fortune Magazine and Harvard studies
Attempting to get to the number of real failures for all startups, not just those with angel group investments, Fortune Magazine published an article claiming that 90% of these startups do fail. The U.S. Census Bureau reports that 400,000 new businesses are started every year in the USA, but 470,000 are dying. What does THAT mean for startup success?
Even more credible statistics
John Chambers, former CEO of Cisco, stated that “More than one-third of businesses today will not survive the next ten years.” And this includes all businesses, not just startups. Harvard University recently published a study that shows three of every four venture-backed firms fail. And the U.S. Bureau of Labor Statistics states that 50% of all businesses survive five years or more, and about one-third survive ten years or more. Remember that this includes the Fortune 500…
