Startups Stack Exchange Archive

Startup death rate after one year?

• posted by: Taiko on 2015-12-17
• tagged: untagged
• score: 7

I am looking for the startup death rate after one year since registration (not since funding).

The only stats I could find are those : http://www.statisticbrain.com/startup-failure-by-industry/

That says 75% survive after one year, which seems very high to me.

Those stats also include religious organizations and real estate companies, so that’s kind of an explanation for the wrongness of the data.

Do we have an even close approximate of how many tech startups survive after one year of struggle?

Answer 8147

• posted by: Dawny33 on 2015-12-17
• score: 2

I do not have data regarding that; but in my experience of being a founder, I have seen startups struggle for existence after maybe one and a half or two years after starting. These would be some reasons (from my experiences):

• Tendency to persevere when they actually need to pivot or shut down: When I started up, we did have an amazing product, but didn’t have a great market fit. It took us two years to realize the same. This was because we had amazing engineering and a great concept, except that our market research was shallow. Lots of awards, lots of recognition made us seem like we were going through the right path, so we persevered; but the ugly truth had to come out, and it did come out. So, these days due to a lot of incubators and competitions mushrooming around, it is very tough to actually accept the failure.
• One year is a very short time: Frankly speaking, the time frame of one year is very short for a startup. By close to one year in age a startup would still be rolling in the excitement of building stellar team and the rose garden of initial adopters. The truth or failure takes a lot more than one year to surface up.

So, unless the startup is a downright crappy and esoteric, I think one year is a very short time for failure.

Answer 8190

• posted by: user7095 on 2015-12-25
• score: 0

Some anecdotal stats: Over the last 25 years we had an office that was too large for our needs so we rented space out to startups and a few longer term small companies. I would say that 75% is about right based on a very limited statistical base (12).

Reasons for failure were typically not getting to the market quickly enough before the money ran out. Focussing on the product but not on the customer. Not having the right marketing mix.

Probable reason for the larger number is that many startups are likely single people setting up a company for contracting reasons where they already have a contract lined up.

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