61 Startup Statistics You Can’t Ignore: 2024 Data on Challenges & Success Rates

The stereotype of startups usually involves twenty-something founders dreaming of creating the next big thing. However, it takes more than sheer ambition to create a successful startup. Aside from having an innovative idea, one has also to successfully navigate hurdles along the way such as the onslaught of the ongoing COVID-19 pandemic.

In this article, get to know crucial startup statistics for various industries and regions. The compiled data will give you an idea of what kinds of startups are ideal to put up today. In addition, you can gauge current market conditions and decide if this year is an opportune time to start your own business.

General Startup Statistics

All around the world, startups are responsible for contributing trillions in value to the economy. This is especially true for global cities where startups are mostly located. For instance, Silicon Valley and San Francisco Bay area are undoubtedly well-known startup havens. However, data suggests that there has been a democratization of the startup economy in at least 30 startup areas around the world. These include global centers like London and New York. Recently, there has been more startup participation in the Asia-Pacific region as evidenced by the high market valuation of startups founded in the area. Meanwhile, in Europe, Stockholm, Oslo, and Tel-Aviv have achieved a good reputation for ease of doing business.

Global Startup Statistics

• The global startup economy has created around $3 trillion in value from 2017 to the first half of 2019. This figure is at the same level as the gross domestic product of a G7 economy. (Startup Genome, 2020)
• In 2019, 84 ecosystems globally have produced startups with over $1 billion in valuation. (Startup Genome, 2020)
• One of the many forecast entrepreneurship trends is that instead of being concentrated in one area, there will be at least 30 global centers for entrepreneurship. In 2020, Silicon Valley ranked number one in the Top 30 Global Startup Ecosystems and Runners-up list. New York and London were tied at number two. They are followed by Beijing in fourth place and Boston in fifth spot. (Startup Genome, 2020)
• 30% of the top global ecosystems for startups are located in the Asia Pacific. In contrast, the region comprised only 20% of the top global ecosystems in 2012. (Startup Genome, 2020)
• 74% of all value from startups are concentrated in the top 10 performing cities globally. (Startup Genome, 2020)
• The most highly valued unicorn worldwide is ANT Group. The Chinese fintech company is valued at $125 billion as of January 2020. Next to ANT Group is ByteDance, which is valued at $75 billion and Infor valued at $60 billion. (Statista, 2021)
• In 2020, 61% of super startup companies worldwide offered business-to-business solutions. In contrast, 39% offered business-to-consumer solutions. (TechTour, 2020)
• As of January 2020, the Asia-Pacific region posted the highest market valuation for unicorns worldwide. It reported $971.37 billion in valuation. The second place went to North America with $857.57 billion in valuation. In third place is Europe with $125.86 billion in valuation. (Statista, 2020)

Startup Statistics by Region

• 81% of startups in Europe are satisfied with the current information and communication technologies in their region or hub. On the other hand, 76% were satisfied with the transportation, logistics, and distribution in their area. (PricewaterhouseCoopers, 2019)
• In a survey, 100% of respondents said that Stockholm is a good place for startups. The second place for ease of doing business for startups is Oslo at 97% followed by Tel-Aviv at 93%. (PricewaterhouseCoopers, 2019)
• As of March 2020, startups were responsible for creating 3.11 million jobs in the US. (U.S. Bureau of Labor Statistics, 2020)
• The largest startup in Canada is Steel River Group. In 2020, the pipeline and construction company posted a growth of 8,662%. Other fast-growing startups are Tru Earth (8,408%), Pinnacle Logistics Solutions (8,257%), and Lendingarch Financial (6,633%). (Canadian Business, 2020)
• In the Americas, Chile had the highest percentage of involvement of its population in startups at 36.7%. Second to Chile is Ecuador at 36.2%. Meanwhile, Guatemala ended up in third place with a 25.1% participation rate. (Global Entrepreneurship Monitor, 2020)
• In Asia, India posted the highest percentage of involvement by its population in startups at 15%. This is followed by South Korea (14.9%), China (8.7%), and Taiwan (8.4%). (Global Entrepreneurship Monitor, 2020)
• In Europe, Armenia posted a startup participation rate of 21%. It is followed by Latvia (15.4%), Slovak Republic (13.3%), Portugal (12.9%), and Ireland (12.4%). (Global Entrepreneurship Monitor, 2020)
• 16% of startup deals in the Middle East and North Africa in 2020 were in the fintech industry. On the other hand, 14% were in the ecommerce industry. Meanwhile, delivery and transport comprised 10%. (Magnitt, 2020)

Startups by Industry Statistics

Most startups are in the technology industry, where they can fall under high-tech or tech-enabled. Examples of industries where startups are found are software-as-a-service, artificial intelligence industry, financial technology, and insurance technology. However, there are also emerging startups in other industries like clean water, space technology, and security consultancy. There are even startups focused on producing healthy snacks.

General Startup Industry Statistics

• 29.1% of unicorns in the US and Canada are in the technology and communications industry. On the other hand, 15.3% of unicorns are in the finance, insurance, and real estate industries. Other leading industries for unicorns are transportation and logistics (11.19%), health and pharmaceuticals (9.33%), and media and advertising (8.58%). (Statista, 2020)
• Startups in the B2B sector comprised 40% of Y Combinator Groups in the winter of 2019. The second most represented industry in Y Combinator groups is consumer goods and services at 13%. Other well-represented industries are healthcare (14%), fintech (8%), and consumer media (6%). (Y Combinator, 2019)
• Investments in companies working on clean water initiatives have grown by 25% over the past five years to reach $570 million. The growth is prompted by concerns over water contamination as demonstrated by the water crisis in Flint, Michigan. (Inc, 2020)

Startups Stats from Various Industries

• 55.82% of independent Software-as-a-Service are founded by one person. On the other hand, 34.51% of independent SaaS companies are founded by two persons. The less popular number of founders were three (7.58%) and four (2.09%). (MicroConf, 2020)
• 64% of bootstrapped SaaS companies offer a free trial for their products. For those who offer a free trial, 73% do not require a credit card for signing up. In contrast, only 36% of such companies do not offer a free trial. (MicroConf, 2020)
• 79.54% of bootstrapped SaaS companies do not have a free-forever plan. Conversely, 20.46% have a free-forever plan. (MicroConf, 2020)
• In 2019, $26.58 billion of funding went to artificial intelligence startups worldwide. This is an increase from 2018 figures of $22.15 billion. The amount invested in AI startups has gradually increased since 2014. (Statista, 2020)
• Startups in the fintech space numbered 2,953 worldwide as of July 2020. On the other hand, there were 1,914 startups in the real estate technology segment and 1,597 in the insurance technology segment. (Statista, 2020)
• The Americas had the most number of fintech startups worldwide, with 10,605 startups as of February 2021. This is followed by EMEA where 9,311 fintech startups were recorded. Lastly, the Asia-Pacific region had the least number of fintech startups at 6,129 startups. (Statista, 2021)
• As of the second quarter of 2019, hemp/CBD startups captured 25% of global equity deal counts. On the other hand, 75% of the deal counts were attributed to other cannabis startups. (Statista, 2020)
• Insurance comparison startups dominated the insurtech segment with 416 startups formed as of September 2019. In second place are insurance infrastructure startups at 298 firms. Meanwhile, auto insurance grabbed the third spot at 178 startups formed. (Statista, 2020)

Best Industries for Launching a Startup

• Investments in companies working on clean water initiatives have grown by 25% over the past five years to reach $570 million. The growth is prompted by concerns over water contamination as demonstrated in the water crisis in Flint, Michigan. (Inc, 2020)
• The growth of companies like SpaceX has contributed to the boom in the private space industry in the US. As a result, venture capitalist investment in the space technology sector has reached $2.27 billion in 2019. (Inc, 2020)
• Security consultancy services for the prevention of gun violence is a growing sector in the US. Thus, the market for security equipment and services for educational institutions is expected to grow to $3.2 billion in 2022. (Inc, 2020)
• The snack food industry is expected to reach $45.8 billion in 2021. Revenue from the snack-food industry is projected to increase by 4.3% in 2021. Much of the demand in the snack food industry is driven by low-calorie, organic, and gluten-free snacks. (IBISWorld, 2021; Inc, 2020)
• Another booming industry for startups is the clean beauty sector, which is estimated to be worth $22 billion in the global market. (CB Insights, 2020)

Startup Challenges and Failure Rates

Across the Americas and Europe, startups echo the same struggle in hiring talents. One reason they cited is the lack of fit between their company and the potential hire, as well as challenges in retaining them. Other concerns that were top of mind for startups are customer acquisition and sales, competition, and domestic regulation.

Top Startup Challenges

• In a survey, 23% of startups in Europe said that they struggled the most with customer acquisition and sales. On the other hand, 11% said their second biggest challenge was attracting and retaining talent. Other challenges cited were product development and innovation (10%), cash-flow and liquidity management (9%), and managing growth (9%). (PricewaterhouseCoopers, 2019)
• In the same survey, 20% of startups said that competition is the greatest threat to their firm. In addition, other threats cited were rapid changes in market conditions (13%), domestic regulation and bureaucracy (13%), and lack of access to finance (13%). (PricewaterhouseCoopers, 2019)
• 28% of startups in Europe said that the lack of skills or inappropriate skills of applicants made recruiting difficult. Furthermore, 27% cited too high salary demands of applicants. Meanwhile, 19% said that applicants decide to work for bigger, more established companies. (PricewaterhouseCoopers, 2019)
• The top public issue for startups in the US, the United Kingdom, and Canada is access to talent. 50% said finding skilled talent is an issue that affects their company. On the other hand, 29% cited cybersecurity while 29% said consumer privacy. (Silicon Valley Bank, 2020)
• 45% of startups in the US, UK, and Canada say that hiring talent is difficult in 2020 compared to 2019. Meanwhile, 39% said that they did not observe any change in hiring. Only 16% said that hiring has become easier. (Silicon Valley Bank, 2020)

Startup Failure Rate Statistics

• Around 90% of startups fail. (National Business Capital & Services, 2020)
• Small businesses in the information industry had the highest failure rate at 63%. This is followed by construction (53%), manufacturing (51%), and services (45%). The US Small Business Administration considers a business as a startup when it hires at least one employee. (National Business Capital & Services, 2020; Investopedia, 2020)
• 60% of healthcare and social services survive after five years in operation. In contrast, only 35% to 40% of businesses in the construction, transportation, and warehousing industry are still in operation after five years. (National Business Capital & Services, 2020)
• LeSports was the most expensive startup failure worldwide based on the amount of funding. Total disclosed funding for LeSports, a sports streaming company, amounted to $1.7 billion. Other expensive startup failures were Solyndra ($1.2 billion), Arriveo ($1 billion), and Jawbone ($929 million). (CB Insights, 2021)
• Another study found that the average two-year fail rate of all startups is 40%. In comparison, the fail rate of Black and Latinx female-led startups was 27%. (Statista, 2021)
• 34% of people interviewed on why startups fail cite the lack of product-market fit as a reason. On the other hand, 22% cited marketing problems. Other reasons given were team problems (18%), finance problems (16%), and tech problems (6%). (Failory, 2021)

The Costs of Establishing a Startup

Establishing a startup is no easy feat. The foremost concern in a founder’s mind is getting access to financing for their startup or small business. In Europe, the main source of funding for startups is through self-financing. Meanwhile, in the US, founders can raise millions in the seed round. However, there appears to be a disparity between the national median funding raised in seed rounds versus those raised by founders who are people of color.

• 45% of startups in Europe said that they have easy access to financing. On the other hand, 32% said that they have difficulty getting access to financing. (PricewaterhouseCoopers, 2019)
• 66% of startups in Europe said that their company’s main source of funding is self-financing. In contrast, only 9% were funded through business angels and 7% from venture capital from other companies. (PricewaterhouseCoopers, 2019)
• Another study found that 42% of startups in the US, UK, and Canada had venture capital as their primary source of funding. Other sources of funding were friends and family (16%), corporate venture investors, and angel groups (5%). (Silicon Valley Bank, 2020)
• In 2020, Black and Latinx women founders raised $3.1 billion in venture funding. (Digital Undivided, 2020)
• There is a growing number of Black and Latinx women founders who have raised more than $1 million in the median seed round. However, data shows that the amount they raised is far behind the national average of $2.5 million. For instance, median seed round funding for Black women was $125,000. On the other hand, median seed round funding for Latinx women was $200,000. (Digital Undivided, 2020)

The State of Startups

Like all other businesses, startups have been severely impacted by the COVID-19 pandemic. Global startup statistics indicate double-digit revenue percentage decrease for startups as well reductions in employees and expenses. However, the post-pandemic outlook paints a more optimistic picture. A survey suggests that more people are inclined to launch startups this year. Moreover, the predicted single-digit growth in the US economy is likely to spill over to the labor market. As a result, hiring activities is likely to increase this year.

Effect of the COVID-19 Pandemic on Startups

• Since the pandemic hit, the typical startup have laid off an average of 33% of their staff. (Startup Genome, 2020)
• As a result of the pandemic, four out of 10 startups are in the red zone. This means that they have three months or fewer of capital runway. (Startup Genome, 2020)
• 72% of startups have experienced a decrease in revenue since the start of the pandemic. On average, they experience a decline of 32%. In addition, more than 40% of companies decreased their revenue by 40% or more. (Startup Genome, 2020)
• Due to the pandemic, 71% of startups have cut back on their expenses on an average of 22%. (Startup Genome, 2020)
• Among startups in OECD countries, Portugal was hit the hardest during the pandemic. From March to April 2020, Portugal had a 70% decline in business formation. Also severely impacted are Turkey (58%), France (54%), and Hungary (45%). (Vox, 2020)
• In the second quarter of 2020, fintech deals fell to about 30% compared to the first quarter of 2020. Consequently, the lowest deal count was observed in the second quarter of 2020 for fintech startups in Asia and Europe since the fourth quarter of 2016. (CB Insights, 2020)

Outlook Post-Pandemic

• 31.2% of entrepreneurs are optimistic about startups. In fact, they plan to start one in February 2021. On the other hand, 28.9% said that they plan to launch a startup two to three months after the said time frame. (Franchise Insights, 2021)
• Meanwhile, 15.6% said that they will do so in the next four to six months and 10.4% said in the next seven to 12 months. (Franchise Insights, 2021)
• In the same survey, 32.9% of respondents strongly agree that now is a good time to start a business. Furthermore, 29.4% said that they agree with said statement. (Franchise Insights, 2021)
• In February 2021, 63.9% of entrepreneurs said that they are more or much likely to start a business now than three months ago. 23.7 of respondents said that their outlook was the same. In contrast, 7.7% said they were much less likely to start a business now than three months ago. (Franchise Insights, 2021)
• 37.3% said that the pandemic has boosted their interest in controlling their own destiny through business ownership. On the other hand, 28.8% said that it has made them favor pandemic-resistant businesses. (Franchise Insights, 2021)
• 72% of startup founders are optimistic that the pace of recruitment will increase this 2021. Startup jobs in logistics, digital media, ecommerce, and deep-tech sectors will most likely benefit from the predicted spike in hiring. (The Economic Times, 2021)
• According to analysts, the US will experience economic growth of 5% or more. Investor focus will likely shift to old-economy sectors such as energy, banking, hotels, and airlines. (The New York Times, 2021)

Success Factors for Startups

The success of a startup hinges on a variety of critical factors that go beyond just having a great idea. For entrepreneurs looking to ensure their venture stands out and thrives, focusing on the following elements can significantly increase their chances of success:

• Market Fit: A clear product-market fit is essential for any startup. This means ensuring that the product or service being offered solves a real problem or fulfills a market need. Startups should research their target audience and gather feedback to refine their offerings.
• Strong Leadership: Effective leadership is crucial in guiding a startup through its early stages. A founder’s ability to lead, inspire a team, and make strategic decisions can differentiate between success and failure. Good leaders are also adaptable and able to pivot when necessary.
• Customer Acquisition: Early on, building a loyal customer base can significantly contribute to a startup’s growth. To stand out in a competitive market, startups must focus on marketing strategies, customer retention techniques, and exceptional customer service.
• Financial Management: Startups often struggle with funding, so careful financial planning and budget management are vital. Monitoring cash flow, reducing unnecessary expenses, and knowing when to seek additional funding will ensure long-term sustainability.
• Innovation: Continuous innovation, whether in product development, customer service, or marketing strategies, is essential for staying ahead of competitors and evolving with market demands.

Startups Today and in the New Normal

Even with the setback caused by the pandemic, the entrepreneurial spirit is very much present in all parts of the world. While some global cities have more robust startup scenes, startup ecosystems are now becoming more widespread globally. In addition, the emergence of new markets due to consumer demand and technological advances means there will be more startups offering innovative products.

As the world economy opens up post-pandemic, more people are becoming optimistic about taking the plunge into entrepreneurship in the hopes of becoming effective business owners. Consequently, this will provide jobs and contribute to economic growth. With this, startups will once again fulfill their role of bringing unique ideas to the market to fill consumer needs in the new normal.

Key Insights

• Global Impact: The global startup economy generated around $3 trillion in value from 2017 to mid-2019, equivalent to the GDP of a G7 country.
• Geographical Spread: While Silicon Valley remains a leading startup hub, significant startup activity is emerging in Asia-Pacific, Europe, and other global cities like London and New York.
• Industry Dominance: Technology and communications dominate the startup scene in North America, followed by finance, insurance, and real estate.
• Startup Challenges: Key challenges for startups include customer acquisition, talent retention, competition, and access to finance.
• Pandemic Effects: COVID-19 significantly impacted startups, with many experiencing revenue declines, layoffs, and reduced capital runway.
• Post-Pandemic Optimism: There is growing optimism among entrepreneurs about starting new ventures post-pandemic, driven by economic recovery and increased interest in entrepreneurship.

FAQ

1. What are the top global startup hubs? Silicon Valley ranks as the top startup hub, followed by New York and London. Other notable hubs include Beijing, Boston, and emerging centers in the Asia-Pacific region.
2. Which industries are most prominent for startups? The technology and communications industry leads, especially in North America. Other prominent industries include finance, insurance, real estate, transportation, logistics, health, and pharmaceuticals.
3. What are the main challenges faced by startups? Startups often struggle with customer acquisition, talent retention, competition, and access to finance. Other significant challenges include managing growth, product development, and navigating domestic regulations.
4. How has the COVID-19 pandemic affected startups? The pandemic led to significant revenue declines for startups, with many reducing their workforce and expenses. Some startups faced severe financial strain, with limited capital runway to sustain operations.
5. Are entrepreneurs optimistic about starting new ventures post-pandemic? Yes, there is considerable optimism about starting new ventures. Surveys indicate that many entrepreneurs believe now is a good time to launch startups, driven by economic recovery and a renewed interest in business ownership.
6. What are some of the fastest-growing startup industries? Fast-growing industries for startups include clean water initiatives, space technology, security consultancy, and the snack food industry, particularly for low-calorie and organic products.
7. How do funding sources differ for startups in the US and Europe? In Europe, startups primarily rely on self-financing, whereas in the US, venture capital is a significant funding source. There is also a noted disparity in funding access for founders of color in the US.
8. What is the survival rate for startups? Approximately 90% of startups fail. However, certain sectors like healthcare and social services have higher survival rates compared to industries like construction and transportation.

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By Nestor Gilbert

Nestor Gilbert is a senior B2B and SaaS analyst and a core contributor at FinancesOnline for over 5 years. With his experience in software development and extensive knowledge of SaaS management, he writes mostly about emerging B2B technologies and their impact on the current business landscape. However, he also provides in-depth reviews on a wide range of software solutions to help businesses find suitable options for them. Through his work, he aims to help companies develop a more tech-forward approach to their operations and overcome their SaaS-related challenges.