25 Important Facts About the Startup Economy

1. Startups add an average of 3 million jobs in their first year, while older companies lose 1 million jobs annually. (ref)
2. Without startups, job growth in the US would be negative 1.2 percent. (ref)
3. Angel investments created 370,000 U.S. jobs in 2010, nearly half of the private sector jobs created that year. (ref)
4. 265,400 individuals provided $20.1B in angel investment capital to a total of 61,900 entrepreneurial ventures in 2010. (ref)
5. In contrast, the private equity industry invested $180B in 2010. (ref)
6. Historically, angels invest $50B per year into 50,000 companies, representing 70% of capital for new ventures; 11 times more than the amount provided by Venture Capitalists. (ref)
7. The long-term historical return of the U.S. Angel market is 27% annually, three times higher than the public stock market. (ref)
8. Warren Buffett’s historical return is 24% annually. (ref)
9. Venture Capital historical returns are around 20%, but over the last 10 years are closer to 5%. (ref)
10. VC returns are heavily dependent upon the IPO market, Angel returns are not.  Most Angel liquidity comes from small value merger & acquisition deals. (ref)
11. By law only those with a net worth of at least $1M, or who earn over $200/yr count as accredited investors, eligible to invest in any deal. (ref)
12. 10% of startups account for 76% of returns. (ref)
13. Median length of due diligence prior to funding is 20 hours per Angel investor. (ref)
14. Many Angels invest 2-3x more capital than necessary in startups in the earliest phase. (ref)
15. Historically, 10-15% of entrepreneurs seeking investment get funded, indicating a “cautious approach to investing” and reflecting “the difficulty for entrepreneurs to secure Angel funding.” (ref)
16. A seed round of $200K costs $20K and months to execute. (ref)
17. 72% of founders find out that their initial intellectual property is NOT a competitive advantage. (ref)
18. Startups need 2-3 times longer to validate their market than most founders expect. (ref)
19. More than 90% of startups fail, due primarily to self-destruction. (ref)
20. The right mentors significantly influence a company’s performance and ability to raise money. (ref)
21. Startups that have helpful mentors, track performance metrics effectively, and learn from thought leaders raise 7x more money and have 3.5x better user growth. (ref)
22. Startups that pivot once or twice raise 2.5x more money and have 3.6x better user growth than startups that pivot more than 2 times or not at all. (ref)
23. Solo founders take 3.6x longer to reach scale compared to a founding team of 2 and they are 2.3x less likely to pivot. (ref)
24. Balanced teams raise 30% more money and have 2.9x more user growth than technical or business-heavy founding teams. (ref)
25. Founders that don’t work full-time have 4x less user growth and end up raising 24x less money from investors. (ref)

Economics, Innovation, Investing, Markets