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Startups

May 1, 2021 | Trends

Startup ventures are society’s most significant disruptive forces, as a white paper by Shepherd (et al.) reveals. Startups are the source of most new employment in an economy, new industries, and innovations and solutions to social and environmental problems.

With that kind of pedigree, it’s no surprise that the entire world is feverishly incubating startups:

  • Market dimensions – There are few reliable statistics on the total number of global startups. F6S, a U.K.-based resource for startup accelerator programs, maintains a crowdsourced database of registered startups. On Oct. 17, 2013, TechCrunch reported that “31,337 F6S Startups have taken at least one deal available through their F6S Startup Card.” On Apr. 1, 2021, F6S listed a total of 1,455,738 registered startups. A comparison would provide an inaccurate picture because there may have been many more startups that did not take advantage of that F6S Startup Card deal in 2013; however, a significant increase is clearly evident. To estimate the total number of startups, one has to know the worldwide business universe. The last time Dun & Bradstreet (D&B) published an update on its global business database in Dec. 2019, it contained 330 million records.
  • Share of business – It’s not possible to contrast F6S with D&B data, but if everything were equal, that 1.5 million would constitute 0.45% of all registered D&B businesses worldwide. In the U.S., there are about 804,000 business establishments that are less than one-year-old, compared to a total universe of 31.7 million businesses, according to 2020 Small Business Administration data. This data suggests that 2.5% of U.S. businesses are less-than-one-year-old startups.
  • Global entrepreneurs – There are almost 8 billion people on this planet. According to the 2019-2020 Global Entrepreneurship Monitor Report, in the U.S., 71% believe it’s easy to start a business. But the difference between that figure and the 2.5% that start a business is vast. In 2017, Global Entrepreneurship Monitor estimated that 582 million people worldwide were in the process of starting or running their own businesses. That year, there was a global population of 7.5 billion, meaning that only 8% of the global population is willing and able to run their own business.
  • Startup investment – According to the Q4 2020 PitchBook/NVCA Venture Monitor, U.S. startups set records in the past three years, raising $156 billion in 2020, topping 2019’s $138 billion and 2018’s $143 billion (chart).
  • Startup employment – The Dotcom boom of the 1990s remains the most remarkable period of startup job generation. Less-than-one-year-old startups created 3.1 million jobs in 2020 in the U.S., down from 4.7 million in 1999.
  • Business survival – According to the U.S. Bureau of Labor Statistics (BLS), approximately 20% of new businesses established in 2016 failed during the first two years of being open, about 45% during the first five years, and 65% of 2006 businesses during the first 10 years. About 25% of new businesses established in 2006 made it to 2020, surviving 15 years or more.

The above data underscores the impact entrepreneurship has on economic growth and societal well-being. Predictably, accelerator and incubator programs will only increase their upward trajectory.

Photo of first Facebook developer meeting in Palo Alto on Aug. 25, 2007 by Michael Tchong.

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