The Most Important Startup Statistics for 2023
Startup statistics show the US experienced a substantial rise in home-based startup foundations, and many companies found alternative solutions for interacting with existing and prospective customers.
Furthermore, research tells us that people of all ages start new businesses and that startup failure rates significantly vary among them. Want to learn other interesting statistics about fledgling businesses in the US and worldwide? Read on!
Key Statistics About Startups for 2023 – Editor’s Choice
- Only 50% of businesses with employees survive past the first five years.
- The United States was home to 33.2 million small businesses in 2022.
- One-fifth of the fastest-growing startups is headquartered in San Francisco.
- 40% of American startups have at least one woman in an executive position.
- More than 65% of small businesses reported profits in 2022.
- 81% of American small-business owners work overtime.
- Over 26,000 startups in the fintech industry were operating worldwide in 2021.
Around 50% of American entrepreneurs start their businesses at home.
(US Small Business Administration)
Business startup statistics from the US Small Business Administration show that approximately half of all small businesses start from home - that’s about 16 million companies.
Only 50% of businesses with employees survive past the first five years.
The number of businesses continuing operations drops considerably over time: Four out of five make it through the first year, while seven out of 10 survive the first two years. Half of them are still around after the fifth year, while only about 30% are in business after a decade. On average, approximately 25% of employer small businesses survive more than 15 years.
In general, small business statistics on company failure indicate that most businesses cease operations because they fail to find the right market and run out of funds.
50% of American small businesses couldn’t fill their vacancies in June of 2022.
About 50% of small US businesses had vacancies in June of 2022 they couldn't fill, which is a 1% decrease compared to the previous month. Just under half of all small-business owners reported increasing compensation, and 28% planned to increase pay in the following months. Although this is a slight softening from May, it indicates that the labor market is still tight.
Furthermore, small-business stats showed that 19% of small-business owners planned to open new positions in the next three months, a 7% decrease from May.
A 50-year-old startup founder is three times more likely to succeed than a 30- or 20-year-old founder.
Startup failure rate statistics indicate that successfully executing strategies and creating value gets easier with more experience. Being comfortable enough to lead and understanding precisely what not to do is vital.
Therefore, 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 critical factors for creating and managing a thriving business.
Bytedance is the world’s highest-valued unicorn, worth around $140 billion.
The unicorn term refers to privately-owned startups worth at least $1 billion. As of April 2022, Bytedance, a Chinese-based artificial intelligence and tech company, was the world's leading unicorn, valued at $140 billion.
Elon Musk's SpaceX venture, based in the USA and worth $100.3 billion, was the second highest-valued unicorn. According to the same startup statistics, Chinese fashion retailer Shein was the third largest privately-held startup ($100 billion).
The same research found that five American and two Chinese startups ranked among the world's ten most valued unicorns.
38% of startups fail because they cannot secure the necessary funds.
A good business idea is mostly about responding to unmet demand and following that up with enough cash to stay afloat.
In 2021, running out of cash (38%) and offering products or services no one needs (35%) were the most common reasons for failure. Being outcompeted (20%) came in third, while 19% of startups failed because of a flawed business model. Legal and regulatory challenges (18%) were the fifth-biggest reason for startup failures.
According to a recent survey, more than 65% of small businesses reported profits in 2022.
Small-business growth statistics show that corporate profitability was lower in 2022 than in the previous year. According to a 2021 survey, 78% of small businesses reported profits, with 65% of them being profitable in 2022 according to the latest data.
Research also found that most small business owners are very happy (39%) with their businesses, while 36% are somewhat happy. Entrepreneurs who are neither happy nor unhappy (10.4%) rank third on the happiness scale. Partially unhappy owners rank fourth (10%), while very unhappy startup owners are among the fewest (4.5%).
There were 33.2 million small businesses in the U.S. in 2022.
(US Small Business Administration)
Entrepreneur statistics show there are 33.2 million startups in the US in 2022, which is a 700,000 rise compared to 2021. About 27 million of them have no workforce outside the owner; 5.4 million employ up to 20 people, and 650,000 have up to 500 workers.
77% of startups rely on personal savings for their initial funds.
American entrepreneurs continue to rely on their personal funds when starting businesses, since the percentage of self-funded startups was 77%.
Around a third of small businesses begin with no more than $5,000; on average, a startup needs about $10,000 in capital to start working. Lastly, only a negligible percentage of small businesses (0.05%) resort to venture capital.
In 2022, retail dominated the US startup market, making for 15.05% of new businesses.
The biggest number of startups in the US are focused on retail, whether operating a brick-and-mortar store or an eCommerce business. Restaurants and other food-related companies are next, comprising 13.71% of startups.
Rounding out the top five are business services (10.1%), health, beauty, and fitness (9.71%), and residential/commercial services (9.33%). All other categories (14) make up less than 6% of startups.
One-fifth of the fastest-growing startups in 2022 were headquartered in San Francisco.
Various US-based startups ranked among the world's fastest-growing startups in the past five years, and some of these are:
- Magic Spoon from New York had a 3,600% search growth in the past half a decade.
- Tailwind from Oklahoma City experienced a search growth of 1,011% in the same period.
- Fandom from San Francisco had a 457% five-year search growth
- Gumroad, also from San Francisco recorded a 426% search growth in the past five years.
Several robotics-oriented tech startups throughout the world have enjoyed growth of over 1,000% over the past five years.
Tech startup statistics make it clear that investors remain focused on future technology. Data shows that many robotics startups have experienced substantial growth over the years:
- Rapid Robotics (9,000%)
- Vecna Robotics (1,533%)
- Skydio (1,100%)
- Robust AI (1,000%)
Artificial intelligence should be worth $422.4 billion by 2028.
This tech sector has been a hot topic for quite some time now, and its growth is expected to be astronomical. In 2021, the industry was worth $59.7 billion, and estimates would have it septupling in the following six years.
Various niches belong to the AI umbrella, including search engine algorithms, self-driving vehicles, medical services, and robotics. Thus, this rapid expansion means that many organizations will need to familiarize themselves with AI and its capabilities to stay competitive.
The San Francisco Bay Area is home to most of the world’s startup deals, with nearly $82,000 million invested between 2015 and 2017.
Startup funding statistics reveal that San Francisco startups received almost twice as much in investments as New York startups did in 2021 - $93 billion and $53 billion, respectively.
In 2020, 40% of American startups had at least one woman in an executive position.
(Silicon Valley Bank)
Research on small business statistics from 2020 shows that approximately 60% of US startups lack women in executive or board of directors positions. Small businesses offering healthcare services are more likely to have women in these positions than tech companies, for example.
Still, the percentage of startups with at least one female founder grew from 22% in 2017 to 28% in 2020.
The latest research shows that entrepreneurs are optimistic about the times ahead, with 62% anticipating a healthy environment for small businesses.
(Design Build Network)
Poll analysis in August 2022 showed that optimism for future growth prospects increased by one percent (to 62%) compared to July 2022. 26% of respondents were optimistic, while those very optimistic accounted for 36% of all responses.
10% of respondents were pessimistic, while 15% were very pessimistic. Finally, the percentage of neutral respondents was 13%.
Immigrant entrepreneurs created around 25% of tech and science companies in the US.
Startup business statistics show that immigrants have started 55% of businesses (319 of 582) worth at least $1 billion. Lastly, 80% of US unicorn companies feature at least one immigrant among the founders or assuming some pivotal role in the business.
81% of American small-business owners work overtime.
Small business owners typically work longer hours than their employees. In addition to staying late after work, a recent study found that 89% of small business owners also regularly work on weekends. Most startup owners report working between 40 and 49 hours per week, with 81% saying they often work nights.
77% of startups faced failure caused by the global COVID-19 pandemic in 2020.
(Thrive My Way, Peterson Institute for International Economics)
Statistics about entrepreneurs during COVID-19 times showed that about 77% of small business owners faced a risk of failure in 2020, while the average startup had to lay off 33% of its staff.
Some of the worst-hit countries regarding the pandemic's impact on startups were European: Portugal, Turkey, France, and Hungary. Still, startup business activity increased by 24% in the US, their numbers rising from 3.5 million in 2019 to 4.4 million in 2020.
Alternative lenders approved the highest share of small business loan applications in 2022.
Alternative lenders led the division of startup loan application approvals in September 2022 with 27.5%. Institutional lenders followed with 26%, while small banks ranked third with 21.5%. Credit unions have approved 20.4% of total small-business funding applications, and big banks participate with 14.9%.
Over 26,000 startups in the fintech industry were operating worldwide in 2021.
If you were wondering how many startups in the US belong to the fintech industry, their precise number was 5,779 in 2022.
The Bottom Line
Small businesses play an enormous role in the national economy and development, making up almost 100% of American companies. Making a startup succeed requires various skills, good predictions, a well-thought-out business plan for continuous results, and plenty of luck. Choosing the right investor is essential, too.
Still, statistics show that the success rate of startups depends on many factors, which is why small businesses with experienced founders have higher chances of succeeding in our turbulent world.
What percentage of startups survive after 5 years?
Around 50% of startups make it through the first five years. The leading causes of ceasing businesses are the inability to secure funds or failure to offer products or services that meet market needs.
Which country is No. 1 in startups?
In the global ranking for startup growth, the US is the world’s leading country, featuring 63.3% of startups worth at least a billion USD. China is the runner-up, with 21.7%.
How many startups are created each year?
Startup statistics indicate that around 305 million startups start operating worldwide annually.
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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