The 20 Most Important Startup Statistics
2020 was a challenging year for everyone. In addition to its impact on public health, COVID-19 also shattered the global economy. However, according to the latest startup statistics, new companies are having little trouble attracting investments. In some countries, startup investments are on track to double compared to pre-pandemic period.
The internet’s to blame for all this good news, of course, or almost all of it. Not only does it serve as a platform for innovative new applications and services, but it’s a vital medium for getting news of innovations out to potential customers and investors.
The abundance of opportunities has led to increased competition. Entrepreneurs face higher stakes and new challenges. But venture capital is flowing freely in America’s booming business economy. Startup failure rates are sobering, but given the potential rewards, a record number of entrepreneurs and their backers are prepared to take a risk.
Changing tides. Great rewards. Unexpected dangers. They’re the essential elements of a good pirate movie and they’re facts of life for entrepreneurs. That’s why we’ve created this page: cogent facts and pithy explanations to help you create solid business plans and flexible strategies for keeping new ventures afloat. Whether you’re launching a business or considering an investment, you’ll find all the essential statistics here.
Key Statistics About Startups – Editor’s Choice
- Only 50% of businesses with employees survive five years.
- The United States was home to 31.7 million small businesses in 2020.
- San Francisco and Silicon Valley are the epicenters of entrepreneurship, home to 13.5% of all global startup deals.
- 53% of American startups have at least one woman in an executive position.
- 51% of small businesses switched to online communication in 2020.
More than 69% of American entrepreneurs start their businesses at home.
(Global Entrepreneurship Monitor)
Business startup statistics show that making your home a base of operations for a new company is nothing unusual - especially considering how positively that decision can impact your monthly costs. Curiously, working from home isn’t limited to startups. While 55% of new businesses start in the garage, 59% of established small businesses are still run from their founders’ homes.
Only 50% of businesses with employees survive past the first five years.
(U.S. Small Business Administration)
Data from the Bureau of Labor Statistics indicates that the first years can be unstable and volatile for new businesses that employ people. A third of all of young companies fail within two years and about half within five, when the attrition rate falls. Small business statistics like these prove that good business strategies and quality management are key to pushing through that initial volatile period. The percentage of companies that fail drops after five years. That makes sense - weaker products and services wash out during the early years. The data also suggests that at five years companies mature and stabilize within their markets.
54% of American small businesses are hiring.
(National Federation of Independent Business)
Research on small businesses reveals continued job growth since the historic lows of the Great Recession between 2007 and 2009. Despite the pandemic, small businesses in the U.S. reported a historically high level of job opportunities in December 2020.
In fact, employers report that it is increasingly hard to find qualified workers. Small business stats show that 89% of those trying to hire report finding very few qualified applicants, or even none, for open positions.
51% of small businesses increased online interactions in 2020.
In an effort to work around the COVID-19 pandemic, just over half of the businesses surveyed by Facebook in 2020 reported an increase in their online communication with clients.
Many of them started selling their products and services online, and 36% of businesses that use online tools said they are currently conducting all their sales online.
Homeowners are 10% more likely to start a new business.
(U.S. Small Business Administration)
Small business startup statistics demonstrate that prudent entrepreneurs understand that a solid financial foundation - like owning a house - is necessary for starting a new business venture. Not only does a house allow you to set up your initial base of operations in the garage, but it can also serve as a collateral for small business loans. Although there are lenders that don't ask for collateral, in most cases borrowers will have to provide a personal guarantee or secure a loan with business assets.
A 60-year-old startup founder is three times more likely to succeed than a 30-year-old founder.
The same study found that a 50-year-old is more than twice as likely to achieve success as a 30-year-old founder, demonstrating that experience is one of the most important factors when it comes to creating a thriving business. Startup failure rate statistics indicate that executing strategies and creating tactics get easier with higher levels of experience. It is very important to feel comfortable enough to lead and that you understand exactly what not to do.
ANT Group is the world’s highest valued unicorn worth around $125 billion.
In the entrepreneurial world, the term unicorn is reserved for privately held startup companies that are worth more than $1 billion. In 2013 when the term was coined, only 39 U.S.-based software companies were worth more than $1 billion.
Today, there are over 500 unicorns, mostly based in the US and China. ANT Group, a subsidiary of Alibaba Group, is the world’s top unicorn. According to startup statistics from 2020, ByteDance is in second place and is valued at $75 billion.
42% of startups fail because they offer products or services that the market doesn’t need.
A good business idea is all about demand. It doesn’t matter how good your product or service is if no one wants it. Running out of cash is the second most common reason for failure, at 29%. Having the wrong team for the job came in third, with 23% of founders identifying it as the main reason for their lack of success.
According to a recent survey, more than 78% of small businesses reported profits.
Small business growth statistics show corporate profitability at its highest level in four years. A favorable economic climate has helped small business owners sleep at night while enjoying higher profits. Invited to rate their happiness on a scale of 1 to 10, entrepreneurs in Guidant’s survey averaged 8 - with 53% assessing their happiness at 9 or higher.
There were 31.7 million small businesses in the U.S. in 2020.
(U.S. Small Business Administration)
Entrepreneur statistics show that American small businesses employed 60.6 million people in 2020, which represents almost half of the country’s entire private workforce. Between April 2019 and April 2020, private-sector employment decreased 14.6% but has since started recovering.
79.7% of U.S. small businesses employ only the founder.
(National Association for the Self-Employed)
Research on small business and startups shows that there is huge potential for expansion. Those plans are on hold at most companies, however. Four out of five companies are one-person shops. Startup statistics show that 16.6% of small businesses have fewer than 10 employees and that only 2.2% have 10 to 19 people working for them.
77% of startups rely on personal savings for their initial funds.
American entrepreneurs continue to rely on their own personal funds when starting businesses. In fact, the percentage of self-funded startups has increased by 4% since Gallup last investigated the matter in 2014. Banks remain the second most widely used source, providing cash, credit, specialized business checking accounts and other financial products for 41% of entrepreneur’s startup needs.
The number of health, beauty, and fitness startups increased by 34% in 2018.
There's a sharp increase in these lifestyle-related startups - evidence of a generation that’s increasingly focused on wellness. Restaurants and food service had a healthy 14% increase compared to the last available research, but business services are still the biggest part of the market, representing 11% of startups and small businesses.
Advanced manufacturing and robotics tech startups are enjoying growth rates of 189.4%.
Data from 2018’s Gruenderwoche Global Startup Ecosystem Report reveals that blockchain and agriculture-technology startups are growing quickly from relatively small bases. But it is artificial intelligence startups that are driving huge growth. Tech startup statistics make it clear that investors are bullish on future technology.
About 60% of American entrepreneurs believe that artificial intelligence is the most promising technology for investments.
(Silicon Valley Bank)
The same research shows that interest in AI is expected to keep steady well into the next decade. American entrepreneurs expect that autonomous transportation will see a sharp increase in investment in the third decade of the 21st century, with cleantech also emerging in the top five most promising industries.
The San Francisco Bay Area, including San Francisco and Silicon Valley, accounts for 13.5% of all global startup deals.
(Center for American Entrepreneurship)
Startup funding statistics reveal that of the top 20 cities in the world for startup deals, half are in the United States. New York is the second largest deal site with 6.5%, while Los Angeles and Boston each host about 4% of the world’s startup deals. Bangkok has seen the biggest jump in venture capital investment, with an increase of more than 600% from 2010 to 2017.
53% of American startups have at least one woman in an executive position.
(Silicon Valley Bank)
Latest research on small business statistics show a 10% jump in women’s representation in the e-suite compared to 2018 - suggesting that gender parity is something U.S. startups are serious about. The report shows an 8% increase in the number of startups with women on the board of directors, too, rising from 29% to 37%.
The latest research shows that entrepreneurs are optimistic about the times ahead with 79% anticipating a strong environment for small businesses post-pandemic.
(Bank of America)
The latest Bank of America Small Business Owner Report reveals that most entrepreneurs have a positive outlook about the future.
Of the 1,000 business owners surveyed, 79% think that small businesses will return to being the backbone of the American economy, and 59% say they will be better prepared to handle any reemergence of the coronavirus.
Immigrant entrepreneurs account for 25% of all new businesses in the United States.
Startup business statistics show that the number of companies started by immigrants is the highest in California, New York, and New Jersey where they represent 40% of all new startups. The fewest immigrant-owned new businesses are in Idaho and North Dakota, where they represent less than 5% of all startups.
81% of American small-business owners work overtime.
Small-business owners generally work much longer hours than their employees. In addition to staying late after work, last year's startup statistics show that 89% regularly work weekends. In fact, 30% of owners work 40 to 49 hours per week, while 20% say they work 50 to 59 hours.
The Bottom Line
It’s never been a better time than right now to start a business in American. With record-low unemployment and a soaring economy, the American market is the most competitive and innovative in the world. Success is far from guaranteed, and work is more demanding than ever, but startup statistics show that with the right talent, solid organization, and a bit of luck, you can surely find success.
I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.
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