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Startup Statistics for 2024: Key Facts, Trends and Insights

Startups are the new rockstars of the business world. They are led by people who dare to dream big, break the rules, and change the game.

Join us in an analysis of the latest startup statistics, where we’ll delve into trends, growth, success and failure rates, costs and funding providing a comprehensive overview of the startup landscape.

Key findings

  • 20% of startups fail in the first year, and up to 70% fail by the tenth year.
  • With 138 startups per 10,000 people, Israel has the most startups per capita.
  • It takes an average of six years for a US startup to exit.
  • Only 66% of US startups are profitable.
  • Venture capital is the top funding source for startups.
  • The average first-year costs for a startup are $40,000.
  • The average startup employee earns $104,000 annually, while startup CEOs earn an average of $142,000.
  • 53% of founders work 60+ hours per week.

How many businesses are started in the US each year?

Americans applied for over 5.05 million Employer Identification Numbers (EIN) in 2022. While EIN application numbers do not provide the precise number of new businesses formed, they paint the best picture of new business formation in the United States [1].

However, this number is about 6.5% lower than in 2021, which experienced the highest number of business formation in history. Nevertheless, the number of businesses formed in 2022 was still higher than at any time before the coronavirus pandemic.

The tech startup formation trend in the US is also weakening. Nineteen thousand tech startups were founded in 2020, a steep jump from around 12 thousand in the previous two years [2]. However, five thousand fewer tech startups came up in 2021, and estimates for 2022 indicated that just about 12 thousand new businesses were to be established by the end of that year.

Which country has the highest number of startups per capita?

Of the top 20 countries with the highest startup output as of July 2023, Israel has the highest number of startups per capita (138 startups per 10,000 people) [3]. Startup output refers to the number of startups founded in a given period. The United States (106/10,000) and Singapore (95/10,000) take second and third place in the ranking.

How long does it take the average startup to “exit”?

It is a great challenge to paint a complete and correct picture of the average time startups take to exit because of the private nature of these transactions. However, some estimates indicate that startups in the United States took six years to exit as of 2021 [4]. In Switzerland, the average time to exit between 2002 and 2021 is five to six years [5].

What is the average startup exit value?

Most American VC-backed startups that exited through an IPO (public listing) in 2022 reached an average value of $580.4 million [6]. Interestingly, public listing is the most lucrative exit strategy over time, while buyouts and acquisitions are less valuable. But in Q1 2023, the average value of a US VC-backed startup that exited via IPO reached $214.5 million. In contrast, the startups that went the acquisition route reached $216.8 million in exit value.


Startup failure rates

What is the average startup failure rate by stage?

Startups usually go through several capital raising stages. The major startup fundraising stages are:

  • Seed funding: This is the initial official fundraising round for a startup. At this point, a startup is looking for money to fund its market research and product development.
  • Series A: This is second round funding after the seed round. At this stage a startup has a working product and maybe some revenue and needs more money to expand.
  • Series B: This is the third funding round after the seed stage. At this stage, a startup has identified its product market fit and looks to raise money to help it meet the growing demand for its product.
  • Series C: This is the fourth funding round after a startup completes the seed round. At this point a startup is already running a successful business and is seeking more money to scale or diversify the business with additional products.
  • Series D: This is the fifth funding round for a startup after the seed funding stage. At this point the business is big, has many employees, and has a strong market presence. But the startup may want to raise more money to supercharge its growth through acquisitions or other actions. While some startups can go all the way to Series E rounds, many startups exit before the Series D funding stage.

More than 50% of startups in America and Europe fail before they reach the Series A funding round [7]. In the US, 70% of the startups donโ€™t make it to the Series B funding round, 85% fail before the Series C round, and 90% collapse before the Series D round. As you can see in the table below, it gets harder for startups to advance at each funding stage.

What is the startup failure rate by industry?

According to the latest startup statistics, after four years of operation, startups in the information industry are more likely to fail (63%) than startups in other industries [8]. Founders in the Finance, Insurance, and Real Estate industries have less to worry about regarding survival chances because only 42% of startups fail after four years of operation.

How many startup businesses fail in the first year?

20% of new businesses do not survive past the first year of founding. The failure rate grows exponentially to 70% in the tenth year [8].

What are the main reasons for startup failure?

Startups fail for various reasons. Knowing the common causes of startup failures can help founders steer their businesses out of trouble and increase their chances of success. In 2022, the vast majority of startup failures were attributed to financial problems. For example, 47% of startups collapsed for lack of financing or investors to inject fresh cash into the business. And 44% of startups failed because they ran out of cash [9].

Poor timing of startup launch, disagreements among startup teams, and legal challenges are each responsible for about 20% of startup failures. About 12% of startups collapse as a result of poor marketing, and 7% fail because of unbearable market competition.

With money being the greatest problem for startups, it goes that startups that get their finances right have a high chance of avoiding failure.


Startup growth and success rate

What is the average time for a startup to become profitable?

Although startups typically prioritize growth over profit, they ultimately hope to turn a profit. It takes an average of two to three years for a startup to become profitable. In their early stages, startups usually have low sales and high costs [10].

Therefore, a startup can become profitable sooner if it can increase its sales quickly and control its costs tightly. On the other hand, a startup that canโ€™t grow its sales quickly or control its costs properly can face a long road to profitability or even collapse due to financial challenges.

How many startups are profitable?

In the US, about 66% of small businesses were profitable in 2023. That indicates that profitability is attainable for most startups [11].

How many startups become unicorns?

A unicorn is a startup with a valuation of $1 billion or higher. Many founders dream to build their startups into unicorns, but only a few see their dream come true. Across the US and Europe, only 1% – 1.5% startups achieve the coveted unicorn status [7].

There is no doubt that unicorns offer a lucrative exit for founders and investors, but it certainly doesnโ€™t come easy or quickly. It takes multiple successful fundraising rounds and consistent growth to bring a startup to a billion-dollar valuation. Reaching this milestone also takes an average of seven years for a startup to hit the unicorn mark [12].

A 2018 analysis of 1,119 US seed tech startups established that the odds of a startup becoming a unicorn hover around 1% [13]. This makes it important to keep your goals realistic when building a startup – dreaming about becoming a unicorn is great, but your real goal should be profitability.


Startup funding

What are the primary funding methods for startups?

Startups get funding through four primary methods:

  1. Angel investors
  2. Venture capital
  3. Crowdfunding
  4. Self-funding

Venture capital (VC) leads the pack, with $57.3 billion extended to startups globally across 6,030 deals in Q1 2023 [15]. Interestingly, over 3,000 deals involved US startups, accounting for nearly $45 billion in VC funding value.

Average Series A valuation

The average Series A valuation for US startups in Q2 2023 increased by 17% to $80.7M from the previous quarter [17]. This marks a trend reversal โ€“ the valuations have declined over the past four quarters through Q1 2023.

The median pre-money valuation for Series A rounds in 2Q23 was $45.5M. This was a 20.1% decline from the previous quarter, with a median valuation of $57M [17].

Average seed round funding

The seed round is the foundation of all startups. In the US alone, the median seed funding was $2.3 million, and the average was $3.6 million [16].

In Q1 2023, the global median seed round funding was $2.1 million [15].

Average Series A funding

$18.7 million in Series A funding was invested in US startups in Q1 2023, a slight decline from the $19.1 million posted in the past two quarters [16].


Startup costs

The latest startup statistics show that the cost of operating a startup increases as the business grows. On average, in the US it costs $40,000 to operate a startup in the first year [18]. Considering that a quarter of startups fail after the first year, and that financial challenges are the primary reason startups collapse, a strong seed funding round can help founders avoid many problems to advance their plans. It goes that a startup with more seed capital than its first-year budget requirements has higher survival chances.

What are the average advertising costs for a startup?

Advertising and marketing spending is one of the primary cost items for startups. Many startups fail as a result of poor marketing. Therefore, a startup can improve its survival chances by making sufficient allocations for advertising and marketing activities. Most startups allocate about 10% of their budget to marketing and advertising expenses in the first year [18].

What about the staff?

Another critical cost item for startups is staff expenses. On average, startups allocate 18.8% of their first-year budget to hiring and remuneration of employees [18].


Startup employees and leadership

Average salary for startup employees

US startup employees earn an average of $104,000 per year, with a salary range between $54,000 and $185,000 [19].

Average startup CEO salary

The average startup CEO salaries decreased to $142,000 in 2023, down from $150,000 in 2022 and $146,000 in 2021 [20].

Average startup COO salary

The typical yearly salary for a startup COO in the United States is $155,581 or $75 per hour [21]. Generally, the salary scale fluctuates between $75,000 (25th percentile) and $166,000 (75th percentile), with the highest earners (90th percentile) making $220,000 annually.

How many hours do startup founders work?

Aside from money, running a startup requires a heavy time investment. Those working for startups, especially in the early stages, usually work beyond the 9-to-5 schedule. Most startup employees spent between 50 and 60 hours a week on the job.

Startup founders can work up to 100 hours a week [22]. So, if youโ€™re planning to build a startup, be prepared to work a lot more than youโ€™ve probably ever worked before.

References

[1] https://fred.stlouisfed.org/series/BABATOTALSAUS#0
[2] https://2022.stateofeuropeantech.com/2023-first-look
[3] https://www.startupblink.com/blog/top-20-countries-by-total-startup-output-in-2023/
[4] https://www.statista.com/statistics/320793/median-time-venture-capital-exit-usa/
[5] https://www.verve.vc/exit-startup-investment-returns/#time
[6] https://nvca.org/sdm_downloads/q1-2023-pitchbook-nvca-venture-monitor-data-2/
[7] https://dealroom.co/uploaded/2022/11/Dealroom-Global-Ecosystem-Benchmarking-2022.pdf
[8] https://www.failory.com/blog/startup-failure-rate
[9] https://www.skynova.com/blog/top-reasons-startups-fail
[10] https://www.uschamber.com/co/start/startup/deciding-what-business-to-start
[11] https://www.guidantfinancial.com/small-business-trends/
[12] https://www.digitalinformationworld.com/2022/04/how-long-does-it-take-for-startup-to.html
[13] https://www.cbinsights.com/research/venture-capital-funnel-2/
[14] https://foundr.com/articles/building-a-business/finance/getting-funding-for-your-tech-startup
[15] https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2023/04/venture-pulse-q1-23-report.pdf
[16] https://news.crunchbase.com/venture/seed-series-a-funding-charts-2023/
[17] https://assets-global.website-files.com/5f34db2422dcee712f853aa0/64c15050726cb072d469e9ef_2Q23StateOfVenturerReport.pdf
[18] https://www.shopify.com/blog/cost-to-start-business
[19] https://www.payscale.com/research/US/Employer=Startup/Salary
[20] https://kruzeconsulting.com/blog/startup-ceo-salary-report/
[21] https://www.ziprecruiter.com/Salaries/Startup-Coo-Salary
[22] https://www.karllhughes.com/posts/working-hours