Startup Statistics: Small business Entrepreneur becomes aware before start new Venture


The world startup ecosystem is booming with the robust growth of the internet and internet-based technologies like AI, machine learning, deep learning, big data analytics, robotics, NPL, Blockchain, 5G, Quantum computing, etc.

The revolution in business intelligence and the use of these technologies raised opportunity for the technocrat and entrepreneur to prove their talent and place their ideas in the form of business models.

Here are some US startup statistics and data that will help the entrepreneur who wants to start their business as a small business or technology based startup.

A successful entrepreneur must aware of the technology trends, customer sentiments, business needs, current statistics, all these are useful to create a unique and successful business model.

During the beginning stages of a startup, finding your seed funding is more than half the work. Your initial funding will most likely come from your own pockets and then the goal is to raise outside capital.

Startup Statistics and Trends

  • The average time between funding rounds from Seed to Series A is 22 months, Series A to B is 24 months, and Series B to Series C is 27 months.
  • 47% of Series A startups spend $400k or more per month.
  • The average funding amount for a Series C round is $50 million.
  • In 2015, startups created over 2 million jobs in the U.S. alone.
  • In 2018, there were 30.2 million small businesses operating in the U.S.
  • Companies raise nearly three rounds before they get to Series A funding.
  • 95% of entrepreneurs have at least a bachelor’s degree.
  • . Once you get to a Series B or C round, you’ll probably work for 15 to 20 months before bringing in new capital.
  • 67% of Series A funded startups in 2017 were already generating revenue before being funded.
  • The average Series A in 2010 was $4.9 million. By 2017, it reached $12.1 million.
  • A 2018 study shows that a 60 year old is 3x as likely to build a successful startup than a 30 year old.
  • In 2018, there were 145 “active unicorns” in the U.S. collectively worth $555.9 billion.
  • In 2016, 69% of U.S. entrepreneurs started their business at home.
  • The ratio of men entrepreneurs to women entrepreneurs in 2019 is 10:7.
  • The time of year you pitch, the detailedness of your data, and the value of your pitch deck are a few of the strongest factors affecting the amount of funding a business receives.
  • It only takes six days to start a business in the United States.
  • 66% of small businesses will outsource services to other small businesses.

Startup Success Rates

  • The highest five-year survival rate for new businesses is mining, at 51.3%.
  • Founders of a previously successful business have a 30% chance of success with their next venture.
  • 82% of successful business owners admit they have the right qualifications and backed up experience to run a company, even with limited cash flow.
  • Paying attention to your customers is important since 14% of startups fail due to not regarding customers’ needs.
  • Founders who have failed previously have a 20% chance of success while first time first time founders have an 18% chance of success.
  • In 2017, U.S. healthcare startups were the strongest industry, bringing in $36.3 billion in revenue along with Inc. 5000 companies.

Startup Funding + Investor Facts

  • Individual venture capital firms receive more than 1,000 proposals a year and are mostly interested in businesses that require an investment of at least $250,000.
  • 33% of startup capital for employer firms is less than $10,000.
  • 12% of startup capital for employer firms is $250,000 or more.
  • About 1% of startups evolve into a unicorn startup, like Uber, Airbnb, Slack, Stripe, and Docker.
  • Venture capital funding reached a decade-high of $155 billion in 2017.
  • About 1% of startups evolve into a unicorn startup, like Uber, Airbnb, Slack, Stripe, and Docker.
  • In 2018, male founders brought in $109.36 billion in VC, while female founders only brought in $2.86 billion in VC.
  • Valued at $75 billion, Bytedance, a Beijing-based news and information content platform, was the top valued startup by venture capital firms worldwide in March 2019.
  • One in four businesses, surveyed by the NSBA, were not able to receive the funding they required, which led to limiting the growth of their business.
  • 1 in 3 begin their small business with less than $5,000.
  • Business loans, credit cards, and lines of credit account for about ¾ of financing for new firms.

Startup Costs Statistics

  • One of the most expensive startup costs is payroll, averaging around $300,500 for five employees across the U.S. according to data from https://smartasset.com/financial-advisor/cities-with-the-lowest-startup-costs-2018-edition
  • The most popular financing method for startups costs in 2018 was personal funds at 77%.
  • Large unicorn startups, such as Airbnb and Uber, have taken a billion dollars or more in debt in order to become more successful.
  • With costs being so large and detrimental to a startup’s survival, the median salary for self-employed individuals was $50,347 in 2016.
  • Recent research has shown the most expensive small businesses and startups to launch are restaurants, medical offices, and manufacturing companies, needing more than $100,000 to get started.
  • Startups in accounting, online retail, construction, and landscaping were most likely to get started with under $5,000 in startup costs, shown in recent research.
  • One of the biggest challenges to the survival of small businesses and startups is the cost of health insurance.

Future of Startups

  • Startup founders are leaving the Silicon Valley “bubble” and heading to the East coast.
  • Unicorns are much more common and trending to be even more common. The rate has increased by 353.1% from 2013 to 2018.
  • To solve problems across various startup industries, new technology will be implemented.
  • Recognize that personalized marketing will become important to the success of your startup.
  • 2019 is the year where startups will turn heavily towards technology to assist with keeping up with their books and avoiding financial distresses.
  • Startup subscription boxes that are related to food, beauty products, apparel, and lifestyle will continue to be popular.
  • More and more startups will begin to collaborate and become open to partnerships.
  • Within the next few years, we will see more entrepreneurs that have recently graduated from college.
  • The new customer success role will become a data engineering role.

GENERAL STARTUP STATISTICS

  • 69 percent of U.S. entrepreneurs start their businesses at home.
  • According to the National Association of Small Business’s 2017 Economic Report, the majority of small businesses surveyed are LLCs (35 percent) followed by S-corporations (33 percent), corporations (19 percent), sole proprietorships (12 percent), and partnerships (2 percent).
  • 51 percent of people asked, “What’s the best way to learn more about entrepreneurship?” responded with “Start a company”.

SMALL BUSINESS OWNER STATISTICS

Who’s starting small businesses today? Here’s a look at small business owners:

  • Gender:
    • 73 percent identify as male; and
    • 25 percent identify as female.
  • Age Range:
    • 50-59 years old: 35 percent;
    • 40-49 years old: 25 percent;
    • 60-69 years old: 18 percent;
    • 30-39 years old: 14 percent;
    • 18-29 years old: 4 percent; and
    • 70+ years old: 4 percent.
  • Education:
    • High School / GED: 33 percent;
    • Associates Degree: 18 percent;
    • Bachelor’s Degree: 29 percent;
    • Master’s Degree: 16 percent; and
    • Doctorate: 4 percent.
  • Reason for starting business:
    • Ready to be his/her own boss: 26 percent;
    • Wanted to pursue his/her passion: 23 percent;
    • The opportunity presented itself: 19 percent;
    • Dissatisfied with corporate America: 12 percent;
    • Laid off or outsourced: 6 percent;
    • Not ready to retire: 6 percent;
    • Other: 5 percent;
    • Life event such as divorce, death, etc.: 3 percent.
  • Ethnicity:
    • White/Caucasian – 71 percent;
    • Hispanic/Latino – 6 percent;
    • Black/African American – 7 percent;
    • Asian/Pacific Islander – 11 percent;
    • Other – 5 percent.
  • 82 percent of successful business owners did not doubt they had the right qualifications and proper experience to run a company.

STARTUP FAILURE RATE STATISTICS

  • Of all small businesses started in 2014:
    • 80 percent made it to the second year (2015);
    • 70 percent made it to the third year (2016);
    • 62 percent made it to the fourth year (2017);
    • 56 percent made it to the fifth year (2018).
  • Given those numbers, a bit more than half of all startups actually survive to their fourth year, while the startup failure rate at four years is about 44 percent.
  • Top 10 causes of small business failure:
    • No market need: 42 percent;
    • Ran out of cash: 29 percent;
    • Not the right team: 23 percent;
    • Got outcompeted: 19 percent;
    • Pricing / Cost issues: 18 percent;
    • User un-friendly product: 17 percent;
    • Product without a business model: 17 percent;
    • Poor marketing: 14 percent;
    • Ignore customers: 14 percent; and
    • Product mistimed: 13 percent.

STARTUP FINANCE STATISTICS

  • Money is a key ingredient to the small business success rate. Here’s a financial snapshot of small business startups:
    A third of small businesses get started with less than $5,000 and 58 percent got started with less than $25,000.
  • In addition, 65 percent admitted to not being fully confident they had enough money to start their business and;
    • An overwhelming 93 percent said they calculated a potential run rate of shorter than 18 months.
  • The most popular small business financing methods in 2018 were:
    • Personal funds 77 percent;
    • Bank loan 34 percent;
    • Borrowing from family/friends 16 percent;
    • Other funding 11 percent;
    • Donations from family/friends 9 percent;
    • Online lender 4 percent;
    • Angel investor 3 percent;
    • Venture capital 3 percent;
    • Crowdfunding 2 percent.
  • 40 percent of small businesses are profitable, 30 percent break even and 30 percent are continually losing money.
  • Having two founders, rather than one, significantly increases your odds of success as you’ll:
    • Raise 30 percent more money,
    • Have almost 3X the user growth, and
  • 82 percent of businesses that fail do so because of cash flow problems
  • 27 percent of businesses surveyed by the NSBA claimed that they weren’t able to receive the funding they needed.

FASTEST GROWING SMALL BUSINESS INDUSTRIES

The industries with the top number of small business startups in 2018 were:

  • Business services: 11 percent;
  • Food/Restaurant: 11 percent;
  • Health/Beauty/Fitness: 10 percent;
  • General retail: 7 percent;
  • Home services: 6 percent.

INDUSTRIES WITH THE BEST STARTUP STATISTICS

The 10 most profitable small business industries by net profit margin (NPM) are:

  • Accounting, Tax preparation, Bookkeeping, and Payroll Services: 18.4 percent NPM
  • Lessors of Real Estate: 17.9 percent NPM
  • Legal Services: 17.4 percent NPM
  • Management of Companies and Enterprises: 16 percent NPM
  • Activities Related to Real Estate: 14.9 percent NPM
  • Offices of Dentists: 14.8 percent NPM
  • Offices of Real Estate Agents and Brokers: 14.3 percent NPM
  • Nonmetallic Mineral Mining and Quarrying: 13.2% NPM
  • Offices of Other Health Practitioners: 13 percent NPM
  • Medical and Diagnostic Laboratories: 12.1 percent NPM

INDUSTRIES WITH THE WORST STARTUP STATISTICS

The 10 least profitable industries in the US by net profit margin (NPM) are:

  • Oil and Gas Extraction: -6.9 percent NPM
  • Software Publishers: -5.1 percent NPM
  • Beverage Manufacturing: -3.7 percent NPM
  • Semiconductor and Other Electronic Component Manufacturing: -0.3 percent NPM
  • Forging and Stamping: 0.4 percent NPM
  • Farm Product Raw Material Merchant Wholesalers: 0.9 percent NPM
  • Beer, Wine, and Distilled Alcoholic Beverage Merchant Wholesalers: 2.1 percent NPM
  • Petroleum and Petroleum Products Merchant Wholesalers: 2.8 percent NPM
  • Grocery Stores: 2.2 percent NPM
  • Bakeries and Tortilla Manufacturing: 2.3 percent NPM

Bottom Line

So, if you want to start your own business, don’t let the startup statistics above put you off. After all, you’re more likely to succeed if you’ve failed than if you’ve never tried:

  • Consider, founders of a previously successful business have a 30 percent chance of success with their next venture, founders who have failed at a prior business have a 20 percent chance of succeeding versus an 18 percent chance of success for first time entrepreneurs

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