New Numbers Shed Light on Startups’ Success

keys_to_find_the_right_startup-resized-600We all know that starting a business is a difficult uphill battle. At Incitrio, we’ve worked with many successful startups, as well as startups that “fail fast” and redefine themselves to later become successful. We ourselves were once a startup, and we understand and respect entrepreneurs willing to take that leap.

But it’s hard to deny that the actual cold hard statistics are scary. Of the 500,000+ business owners that launched companies in 2012, only a few will ever achieve even a fraction of the success and fame of CEOs like Mark Zuckerberg.

Even with the odds stacked against them, thousands of startups launch every year. When they’re successful, it’s pretty staggering. Those Cinderella stories are just irresistible (think Facebook, Twitter, and Spotify).

Startup founders are motivated. Really motivated. The tech giants that rule the international economy, including Apple and Google, had very humble roots. Technology is one place in the American economy where true rags to riches success is still possible, and in fact happens almost yearly. The problem? Only a few of the companies with big dreams will actually ever achieve them.

While it can seem like a combination of talent, planning, and sheer luck, there are actually some statistics that point to what makes a startup a success. Check out the infographic from the Harvard Business School, below, which illustrates some insightful stats about startup success. Here are the stats we found most interesting, below.

  1. The average age of the founding team of a startup in 2012 was 35-44.
  2. 39% of startup founders were previously CEOs/founders of other organizations.
  3. The top 3 metro areas for high-tech startups are Bolder, CO; Ft. Collins-Loveland, CO; and San Jose/Sunnyvale/Santa Clara, CA.
  4. 27.3% of Angel Investor dollars went to Internet-based startups.
  5. 18.1% of Angel Investors invested in California.
  6. 75% of all startups fail, and 90% of all products fail.
  7. 93% of startups that scale too early never break the $100k/mo revenue threshold.
  8. Only 18% of entrepreneurs succeed in their first venture.

While the statistics can seem daunting, there’s a lot to be learned. Knowing when to keep it simple and not scaling up too soon is crucial. Scale too early, and the stats show that you’re probably doomed. Also, counting on an Angel Investor will probably only spell heartbreak. These stats aren’t meant to dissuade entrepreneurs, but rather show that failure isn’t necessarily a bad thing, especially if you do it fast and move on. And, if you have the right combo of talent, a defined market need, and funding, you might just be the next Twitter.


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