Latest posts by Alexander Jarvis (see all)
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CBInsights have an interesting post in which they report on their analysis of starups that entered the deadpool between 2010 and 2013 to see what they could uncover about startup surival and mortality.
It’s important to note though that this is reported dead. There are a lot of zombies- walking dead around, and since success is reported on the most, there isn’t a great deal of information around on the reality of startup- failure!
“VCs bury their dead very quietly”
The key findings on startup mortality
Companies typically die around ~20 months after their last financing round and after having raised $1.3m. Companies in the social industry saw the highest of number of startup failures in the period in question.
Most startups don’t raise >$1m before death
- 55% of failed startups raised <$1m – infant mortality is the majority of startup death
- 70% companies died having raised <$5m – implies most startups dont live much passed the series-a stage
- The average death raise is $11.3m, but the median is actually $1.3M. There are some outliers flaming out having raised a bunch of cash
Startups survive 20 months on average after raising investment before shuttering
- 71% of failed startups last less than 2 years after their last funding round
- The average and median time to death is pretty similar, there aren’t many exceptions
- 10% of companies limp along for more than 3 yers before declaring it quits
- Planning to raise fr an 18 month runway, which many have as a heuristic probably makes sense when you look at median longevity