Start-up funding
1. Those who run a SaaS software business reinvest up to 120% of their revenue in the first five years in sales and marketing.
(Tomasz Tunguz)
Due to fierce competition in the SaaS industry, businesses need to reinvest most of their revenue back into their business to grow.
This typically means hiring more sales people, developing new marketing campaigns, and investing in the overall customer experience.
These activities require significant funding, so SaaS businesses tend to raise a lot of money in the early years.
2. There are generally 3 rounds of fundraising before reaching Series A funding.
(TechCrunch)
Seeking capital is one of the most critical and difficult aspects of starting a business.
According to TechCrunch, most survey respondents who have startups go through three funding rounds before getting a Series A investment.
Each round of funding is becoming more and more difficult, as the number of potential investors is decreasing.
But don't let that discourage you.
If you have a great business idea and a solid plan to implement it, you'll be able to raise the funds you need to get your business off the ground.
3. The amount of funding obtained by a company depends on several factors, including the time of year in which the presentation is made, the level of detail of the proposal, and the perceived value of the presentation package.
(Forbes)
There are many factors that come into play in determining how much a startup can raise.
Keeping the factors mentioned above in mind when planning your fundraising strategy can make the difference between reaching your fundraising goals or not.
4. Venture capital was used in less than 6% of all new businesses in the United States in 2018.
(Kauffman Foundation)
While venture capital is often associated with startups, the truth is that most new businesses in the United States do not receive any such funding.
If you're starting a business and think you need resume money to succeed, maybe you should rethink your strategy.
Startups fail
5. The lack of money for personal and commercial funding is the second reason why most startups fail (29% of cases).
(CBInsights)
Funding is often one of the most critical factors for the success of a startup.
The CBInsights report on startup failures indicates that lack of money is the second most common reason for failure.
When starting a business, make sure you have a solid plan for raising funds and managing your finances.
6. No less than 14% of all startups blame their lack of attention to customers as the main reason for their failure.
(Fundera)
Customers are the lifeblood of any business, so it's no surprise that overlooking them is one of the biggest mistakes you can make.
Make sure you're constantly talking to your customers and getting feedback on how you can improve what you do.
Only then will you be able to make the changes needed to keep them happy and coming back.
7. Failure within a year is common in 10% of startups.
(Failory)
Starting a business is hard work, and it's no surprise that many don't make it past the first year.
Indeed, one company out of ten does not succeed in making it through this period.
It is essential to know what to do to succeed if you are just starting out.
Make sure you develop a solid business plan and are ready for the challenges that lie ahead.
8. Most businesses that fail do so between the second and fifth year (70% of cases).
(Failory)
Another statistic related to startup failures indicates that most businesses that fail do so between the second and fifth year.
As already mentioned, the early years are full of challenges. So it's not surprising that this is the best time for businesses to fail.
To be successful in the long term, it is essential to weather the storm during these early years.
9. The inability to read marketing requests is the number one reason for business failures, as shown by 42% of all failures.
(CBInsights)
Understanding market demands is crucial for any business, but it's critical for startups.
These demands can change rapidly, and startups need to be able to adapt quickly to stay ahead of the curve.
This shows how important it is to always learn about your sector and your customers.
Only then will you be able to make the changes needed to stay ahead of the competition.
10. A weak core team is the reason why 23% of businesses fail.
(CBInsights)
The team you set up to launch your business is essential for its chances of success.
The right mix of people with the right skills and experience can significantly increase the chances of success.
But more importantly, you need to make sure everyone is on the same page and working toward the same goal.
Only then will you be able to build a solid foundation for your business.
Have your own startup
11. In the United States, it only takes six days to start a business.
(Dynado)
It only takes a few days to create a startup, thanks to the relatively simple process of registering your business and putting all the necessary documents in place.
Starting a business in other countries can be much more complicated. If you are considering starting a business abroad, make sure you are ready for the challenges that lie ahead.
12. Nearly 70% of entrepreneurs have started a home business
(Small Business Trends)
As more and more people work from home, it is not surprising that many startups are founded there.
At the same time, working from home can be distracting and make it difficult to get work done.
So if you're considering starting a home business, make sure you have a dedicated workspace and the discipline to stay focused on your work.
13. People who own their own homes are 10% more likely to start their own business.
(U.S. Small Business Administration)
There seems to be a correlation between owning a home and starting a business in some cases.
Maybe it's because homeowners have more wealth and are therefore more financially stable, or because these people are more likely to have the space needed to set up a dedicated office.
If you're considering starting a business, it might be worth buying a home first.
14. Small business owners in the United States work overtime more than 81% of the time.
(Fortunly)
Having a startup and getting it off the ground certainly doesn't mean you can rest on your laurels.
More than eight out of ten startup founders are working overtime to launch their businesses.
If you're not ready to work overtime, starting a business might not be right for you.
Origins of startups
15. The combination of Silicon Valley and San Francisco represents 13.5% of global startups.
(Startups USA)
There's no question that Silicon Valley has been the epicenter of the startup world.
But it's not the only place where startups are founded.
San Francisco, in particular, is also home to a large number of startups.
The combination of these two areas represents an important part of all start-ups in the world.
16. It takes up to 3 times longer than expected to see if a person's business model makes sense.
(Forbes)
Business model validation is essential to the success of a startup.
But it's also something that can take longer than you might expect.
If you're considering starting a business, make sure you have the patience to get through tough times while you find your footing.
Startup potential
17. Being a high-growth company offers shareholders returns five times higher than that of a medium-growth company.
(McKinsey)
If you're looking for high returns, starting a high-growth business is the way to get them.
If achieving high growth isn't easy, the rewards can be significant.
Shareholders of high-growth companies can expect returns five times higher than those of medium-growth companies.
18. A software company that grows at a rate of 60% per year has a 1 in 2 chance of becoming a multi-billion dollar company.
(McKinsey)
High growth potential is one of the main reasons why people start a business.
A 60% growth rate could be considered a significant figure for a company's chances of success when it comes to reaching multi-billion dollar status.
In reality, the odds are still only 50/50.
While the potential for high growth is present, it is still a risky proposition.
19. As many as 80% of all successful founders admit that they had the right qualifications and experience when they started their business.
(Small Business Trends)
There is no one-size-fits-all formula for creating a successful business, but having the right qualifications and experience can be very useful.
As many as 80% of successful founders think they had what it took to start their business.
Ensuring that you have the skills and experience you need to succeed in your business can be very helpful.
Curious facts about startups
20. In Japan, nearly 1% of citizens are entrepreneurs.
(Entrepreneur)
Curiously, the percentage of entrepreneurs in Japan is relatively low.
This contrasts with other countries where the percentage of entrepreneurs is much higher.
21. Nearly two-thirds of small businesses will outsource certain services to third parties.
(FreshBooks)
Although many tasks are performed by the founders of a startup, there comes a time when they need to outsource certain services.
Two out of three small businesses will outsource at least one type of service to a third party.
This is often done to focus on core competencies that have a significant impact on business development.
What makes a startup successful?
Here are the essential qualities that all successful startups share.
1. A clear mission and vision
A clear mission and vision give direction to a young company and help it focus on its goals.
While venture capital firms (and other entities with specific interests) will trick you into believing that the only thing that matters is making money, the truth is that having such a clear mission and vision is just as important.
2. A passionate and committed team
Startup failure rate statistics indicate that lack of commitment is one of the main reasons startups fail.
A passionate and committed team is essential to the success of a startup.
The founder, co-founder, and all other team members should believe in the mission and be ready to work hard to achieve it.
3. The focus on the customer
Various statistics on starting a business indicate that focusing on the customer is essential to ensure the success of a startup.
The customer should always be at the forefront of the company's spirit and, therefore, startups should provide value to customers and solve their problems.
4. The will to pivot
The Covid-19 pandemic has shown that startups need to be flexible and ready to pivot to survive.
To that extent, startups that can pivot quickly and adapt to changing circumstances are always more likely to survive than those that don't.
Pivoting doesn't mean completely changing your business model.
It simply means being open to change and flexible to current needs.
5. A culture of innovation
Statistics on tech startups show that a culture of innovation is critical to the success of a startup.
A startup must constantly innovate to stay ahead of the competition.
She should also be ready to take risks and experiment with new ideas.
6. A data-driven approach
In today's data-driven world, startups need to base their decisions on this approach to succeed.
That means using concrete numbers to make decisions about what to do next.
It also means using data to track progress and identify areas for improvement.
Startup funding statistics also show that data-driven startups are more likely to receive funding from investors because they can provide evidence for any funding requested.
7. A global mindset
The world is increasingly connected and globalized and startups need to have this mindset to succeed.
They need to be aware of what is happening in other parts of the world and be able to adapt their products and services accordingly.
8. An ability to attract and retain top talent
Statistics on the success rate of start-ups indicate that those that succeed in attracting and retaining top talent are more likely to succeed.
Attracting and retaining top talent is also essential for a startup to grow rapidly.
9. Positive cash flow
Part of entrepreneurship is ensuring that your business has the cash flow to meet daily needs.
That basically means your business is bringing in more money than it is spending.
Positive cash flow is essential for a startup to survive and grow.
Other factors to consider
The startup sector is booming right now, and there are more opportunities than ever.
However, it is becoming increasingly difficult to succeed with the large number of start-ups that exist, which makes starting a business discouraging.
Whether you're founding a tech startup or a more traditional business, there are a few key things you need to consider to increase your chances of success.
Let's look at these factors.
Your evaluation
If securing investments is important for their business, startup owners should keep in mind that their business is only worth in terms of the value perceived by investors.
You may think your business is worth a certain amount of money, but proving that to investors is another story.
Crowdfunding
For entrepreneurs, crowdfunding can be a great way to raise money for their business.
Crowdfunding platforms like Kickstarter and Indiegogo allow you to solicit funds from the general public
If you're considering crowdfunding, make sure your campaign is well-designed and that the rewards offered are attractive to potential donors.
FAQ - Startup statistics
What are Fintech startups?
Fintech startups are businesses that use technology to provide financial services.
These include businesses that offer online banking, mobile payments, and other financial services.
What does venture capital funding mean?
Venture capital funding is when investors give money to a startup in exchange for equity.
This type of funding is typically used by high-growth startups that need capital to grow rapidly.
How important are startup founders?
Startup founders are critical to the success of a business.
They are responsible for the vision and direction of the company.
Founders need to be able to attract and retain top talent, raise capital, and grow the business.
What industries should be taken into account in the startup ecosystem?
Healthcare, artificial intelligence, e-commerce, robotics, real estate, and even blockchain applications are some of the top industries where growth is exploding and that you might be considering right now.
Having a global startup in these sectors can also mean that your business has an extended reach in one of these new business frontiers.
What are unicorn businesses?
Unicorns are startups that have reached a valuation of $1 billion.
These businesses are high-growth startups that have raised a lot of capital.
What are some examples of successful American startups?
Uber, Bytedance, Airbnb, and Pinterest are examples of successful American startups.
These young American companies have all changed their respective sectors.
What takes a business out of the start-up phase?
Various factors influence the ability of a business to grow after the start-up phase.
The size of the market and the product or service offered can have an impact on a company's ability to grow.
Likewise, the pricing strategy and business model used during the start-up phase can also make a big difference.
Furthermore, the country in which a startup operates makes a big difference.
For example, businesses created in North America will be different from those reported in the United Kingdom.
Conclusion
Starting a business is a risky proposition, but at the same time, it can be a rewarding experience.
With proper planning and execution, your startup can become a success.
Remember to always have a solid plan in place, attract top talent, and secure appropriate funding based on your specific needs.
