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> 90% of all startups fail There's no way it's that low. Maybe 90% of VC-backed startups, and even then I think it depends on how you massage the definition o

> 90% of all startups fail There's no way it's that low. Maybe 90% of VC-backed startups, and even then I think it depends on how you massage the definition of 'fail'

jeron 7y ago
https://www.failory.com/blog/startup-failure-rate https://www.failory.com/blog/startup-failure-rate 90% failure rate comes from research by Small Biz Trends
- MegaButts 7y ago
  A cursory glance at that data tells me it makes no sense. They cite several industries with failure rates substantially below 90%, don't give a single instance of a failure rate greater than 90%, but tell us it averages out that way. Also real estate businesses only have a 42% failure? So I have a greater than 50% chance of becoming a real estate mogul? I just don't buy it, and I don't believe those other numbers either. And the only source they cite on the website, http://www.moyak.com/papers/business-startups-entrepreneurs.html http://www.moyak.com/papers/business-startups-entrepreneurs...., doesn't really lend any explanation to their numbers. I think their data is wildly skewed by sampling bias, as they claim to get their data from interviewing failed founders. Welp, they never interviewed me - how many other people have they never interviewed because they simply never knew the company existed? How many founders, after failing, go out of their way to talk about their failure? VCs have a strong incentive to create a story that starting a company has a greater chance of success than it does, because it's low-risk for them and they want a churn of potential investment prospects. I think 1% is a much more realistic number than 10%, unless we're limiting ourselves to Sequoia-backed post-Series A companies.
tedmiston 7y ago
It also depends on how you define "startup". The informal definition we think of day-to-day is fairly fuzzy. There's nuance in differentiating a small business operated by a few people from a startup. Being venture-backed is a simple differentiator but there are still legitimate startups this would exclude, e.g., serial founders who don't need to raise or products that make money early. With respect to "fail"... is an acquihire or an even-money, 1-3x exit etc a "failure". Probably, yes for the VC, but not necessarily for the founder. Accelerators are incentivized to count "successes" liberally as well. With a more broad definition of startup, it's easy to see the failure rate at 99%+.

> 90% of all startups fail There's no way it's that low. Maybe 90% of VC-backed startups, and even then I think it depends on how you massage the definition of 'fail'

jeron 7y ago

https://www.failory.com/blog/startup-failure-rate https://www.failory.com/blog/startup-failure-rate 90% failure rate comes from research by Small Biz Trends

MegaButts 7y ago
A cursory glance at that data tells me it makes no sense. They cite several industries with failure rates substantially below 90%, don't give a single instance of a failure rate greater than 90%, but tell us it averages out that way. Also real estate businesses only have a 42% failure? So I have a greater than 50% chance of becoming a real estate mogul? I just don't buy it, and I don't believe those other numbers either. And the only source they cite on the website, http://www.moyak.com/papers/business-startups-entrepreneurs.html http://www.moyak.com/papers/business-startups-entrepreneurs...., doesn't really lend any explanation to their numbers. I think their data is wildly skewed by sampling bias, as they claim to get their data from interviewing failed founders. Welp, they never interviewed me - how many other people have they never interviewed because they simply never knew the company existed? How many founders, after failing, go out of their way to talk about their failure? VCs have a strong incentive to create a story that starting a company has a greater chance of success than it does, because it's low-risk for them and they want a churn of potential investment prospects. I think 1% is a much more realistic number than 10%, unless we're limiting ourselves to Sequoia-backed post-Series A companies.

tedmiston 7y ago

It also depends on how you define "startup". The informal definition we think of day-to-day is fairly fuzzy. There's nuance in differentiating a small business operated by a few people from a startup. Being venture-backed is a simple differentiator but there are still legitimate startups this would exclude, e.g., serial founders who don't need to raise or products that make money early. With respect to "fail"... is an acquihire or an even-money, 1-3x exit etc a "failure". Probably, yes for the VC, but not necessarily for the founder. Accelerators are incentivized to count "successes" liberally as well. With a more broad definition of startup, it's easy to see the failure rate at 99%+.