Just under half of all new U.S. businesses fail within five years - 49.4% - and 65.3% are gone within ten (U.S. Bureau of Labor Statistics, Business Employment Dynamics). That real, boring number is far kinder than the folk claim that 90% of startups die. Among venture-backed companies, though, the odds do get brutal: CB Insights found running out of capital in 70% of 431 recent shutdowns, and Carta logged 966 venture-backed closures in 2024 alone. Meanwhile US venture dollars hit 339.4 billion in 2025, but half went to 0.05% of deals - so the money that exists is not reaching most founders. This analysis consolidates data from the U.S. Bureau of Labor Statistics, CB Insights, PitchBook-NVCA, Carta, and 14 other primary sources to separate the survival math from the mythology.
TL;DR
- 49.4% of new U.S. businesses fail within five years; 65.3% within ten (U.S. Bureau of Labor Statistics, Business Employment Dynamics 2025).
- 20.4% of new businesses fail in year one - the real number behind the “90% fail” myth (Commerce Institute analysis of BLS data, 2025).
- Running out of capital was cited in 70% of 431 recent venture-backed shutdowns (CB Insights, Why Startups Fail 2024).
- 43% of failed startups lacked product-market fit; 29% blamed bad timing (CB Insights, Why Startups Fail 2024).
- 95% of enterprise generative-AI pilots delivered no measurable P&L impact (MIT, State of AI in Business 2025).
- US venture capital hit 339.4 billion dollars across 16,709 deals in 2025, but half of all dollars went to 0.05% of deals (PitchBook-NVCA, Venture Monitor Q4 2025).
- 15.9% of 2025 venture deals were down rounds, a decade high (PitchBook, 2025).
- Carta recorded 966 venture-backed shutdowns in 2024, up from 769 in 2023 (Carta, 2025).
- U.S. business bankruptcy filings rose 7.1% to 24,737 in the year ending December 2025 (Administrative Office of the U.S. Courts, 2026).
- The Information sector has the worst survival: a 28.4% first-year failure rate (LendingTree analysis of BLS data, 2025).
- First-time founders succeed about 18% of the time versus 30% for previously successful founders (Harvard Business School; Data Driven VC).
- 54% of founders reported burnout in the past year (Sifted, 2025).
1. The Survival Curve: What BLS Data Actually Shows
The most repeated startup statistic - that 90% fail - is wrong for the broad economy. Federal Business Employment Dynamics tracking shows that roughly 8 in 10 new establishments survive their first year, about half reach year five, and a third are still open at year ten (U.S. Bureau of Labor Statistics, Business Employment Dynamics 2025). The commentary that matters: survival is a slow attrition curve, not a cliff. Most closures happen gradually across a decade, not in a dramatic first-year wipeout. The 90% number only describes the narrow, high-risk slice of venture-scale startups swinging for outsized outcomes - which is a different animal from the median new business, many of which are solo ventures and side hustles.
| Metric | Value | Source |
|---|---|---|
| New businesses surviving year 1 | ~79.6% | BLS, Business Employment Dynamics 2025 |
| New businesses failing within year 1 | 20.4% | Commerce Institute analysis of BLS, 2025 |
| Failing within 5 years | 49.4% | Commerce Institute analysis of BLS, 2025 |
| Failing within 10 years | 65.3% | Commerce Institute analysis of BLS, 2025 |
| First-year closures, Mar 2024-Mar 2025 cohort | 22.1% (~218,861 firms, ~600/day) | LendingTree analysis of BLS BED, 2025 |
| Startups fitting the “90% fail” profile | Venture-scale only | Failory, Startup Failure Rate 2026 |
Note: BLS survival rates fluctuate year to year with the business cycle; the ~50% five-year survival figure has held remarkably steady since the 1990s.
2. Why Startups Fail: Causes From the Post-Mortems
Cash is the coroner’s verdict, not the disease. CB Insights analyzed 431 venture-backed companies that shut down since 2023 and found running out of capital cited in 70% of cases - but it flags this as the final symptom, with poor product-market fit (43%) and bad timing (29%) as the true root causes (CB Insights, Why Startups Fail 2024). The pattern is consistent across research eras: build something people do not want, and the money always runs out eventually. The AI cohort now has its own failure signature - MIT found the vast majority of enterprise pilots never touch the income statement.
| Failure cause | Share citing it | Source |
|---|---|---|
| Ran out of capital (final cause) | 70% | CB Insights, Why Startups Fail 2024 |
| Poor product-market fit | 43% | CB Insights, Why Startups Fail 2024 |
| Bad timing / macro conditions | 29% | CB Insights, Why Startups Fail 2024 |
| Unsustainable unit economics | 19% | CB Insights, Why Startups Fail 2024 |
| No market need (classic post-mortems) | 42% | CB Insights, Top 20 Reasons Startups Fail |
| Premature scaling among high-growth startups | 74% | Startup Genome, Why Startups Fail (most recent available) |
| Enterprise GenAI pilots with no P&L impact | 95% | MIT, State of AI in Business 2025 |
Flag: the Startup Genome premature-scaling finding comes from a study of 3,200+ high-growth tech startups and remains the most-cited figure on the topic, though it is dated - treat it as directional.
3. The Funding Squeeze: Venture Capital in 2025
Capital came back in 2025, but only for a sliver of the market. US venture deployment recovered to 339.4 billion dollars, yet half of all venture dollars went into just 0.05% of deals, and AI companies absorbed roughly 65% of the total (PitchBook-NVCA, Venture Monitor Q4 2025). For a non-AI founder, the headline recovery is misleading: fund managers raised the least capital since 2018, meaning the pipeline of future checks is thinning even as megadeals dominate the averages. Down rounds hit a decade high, resetting valuations for companies that raised at 2021 peaks. Our venture capital statistics roundup breaks down the deal-stage detail.
| Metric | Value | Source |
|---|---|---|
| US VC deal value, 2025 | 339.4 billion dollars across 16,709 deals | PitchBook-NVCA, Venture Monitor Q4 2025 |
| US VC fundraising, 2025 | 66.1 billion dollars (lowest since 2018) | PitchBook-NVCA, Venture Monitor Q4 2025 |
| Funds closed, 2025 | 537 (~30% of the 2021 count) | PitchBook-NVCA, Venture Monitor Q4 2025 |
| Share of dollars in top 0.05% of deals | 50% | PitchBook-NVCA, Venture Monitor Q4 2025 |
| AI share of US VC deal value | ~65% (~222 billion dollars) | PitchBook-NVCA, 2025 |
| Down rounds as share of 2025 deals | 15.9% (decade high) | PitchBook, 2025 |
| Global VC funding, 2025 | Third-largest year on record | Crunchbase, 2025 |
Outlier: from Q2 2023 through Q1 2025, Carta’s down-round rate topped 20% in seven of eight quarters before easing late in 2025 (Carta, State of Private Markets).
4. Shutdowns and Bankruptcies: The 2025 Reckoning
The failures moved up-market. Where 2022-2024 killed thin seed-stage bets, SimpleClosure reported that 2025 closures were older, better-funded companies - Series A jumped from about 6% to 14% of all shutdowns (SimpleClosure, State of Startup Shutdowns 2025). This is a maturation story, not a collapse: more companies that cleared early validation and raised institutional money still hit the end of their runway. Formal bankruptcy data confirms the pressure, with commercial filings climbing back toward pre-pandemic levels.
| Metric | Value | Source |
|---|---|---|
| Venture-backed shutdowns, 2024 | 966 (up from 769 in 2023) | Carta, 2025 |
| YoY rise in venture-backed shutdowns, 2024 | ~60% | Carta (via SimpleClosure), 2025 |
| Series A share of 2025 shutdowns | 14% (up from ~6%) | SimpleClosure, 2025 |
| AI share of 2025 closures | ~16% | SimpleClosure, 2025 |
| U.S. business bankruptcy filings, year ending Dec 2025 | 24,737 (up 7.1%) | Administrative Office of the U.S. Courts, 2026 |
| Chapter 11 filings, 2025 | 9,201 | Administrative Office of the U.S. Courts, 2026 |
| July 2025 commercial Chapter 11 filings | 911 (up 78% YoY) | Epiq / American Bankruptcy Institute, 2025 |
Context: AngelList logged a separate 56% jump in wind-downs (364 in 2024 vs 233 in 2023), and all shutdown datasets undercount because most closures never touch a tracker (TechCrunch, 2025).
5. Failure by Industry and Sector
Not all bets carry equal odds. The Information sector - which houses software and tech startups - posts the worst survival of any industry, with a 28.4% first-year failure rate and only 29.1% of firms still open at year ten (LendingTree and Commerce Institute analyses of BLS Business Employment Dynamics, 2025). Capital-light, cyclical services fail fastest; asset-heavy and essential sectors like agriculture and food services survive longest. Software’s high mortality is the flip side of its low startup cost: easy to launch, brutally competitive to sustain. The SaaS sector’s own benchmarks show why - revenue leaks out through churn every month.
| Industry / metric | Value | Source |
|---|---|---|
| Information sector, first-year failure | 28.4% (highest) | LendingTree analysis of BLS BED, 2025 |
| Professional, scientific & technical services, first-year failure | 25.5% | LendingTree analysis of BLS BED, 2025 |
| Accommodation & food services, first-year failure | 14.7% | LendingTree analysis of BLS BED, 2025 |
| Agriculture, forestry, fishing & hunting, first-year failure | 14.3% (lowest) | LendingTree analysis of BLS BED, 2025 |
| Information sector, surviving to year 10 | 29.1% (worst) | Commerce Institute analysis of BLS, 2025 |
| Agriculture, surviving to year 10 | 50.5% (best) | Commerce Institute analysis of BLS, 2025 |
| Median annual revenue churn, private B2B SaaS | 12.5% | Lighter Capital, 2025 B2B SaaS Benchmarks |
Outlier: agriculture’s ~50% ten-year survival is nearly double the Information sector’s, showing industry choice moves the odds more than most founders assume.
6. Stage, Founders, and the Odds
Progress does not equal safety, but it changes the risk sharply. Carta’s Class of 2018 seed cohort shows the funnel: 62% shut down within seven years, only 15% reached Series B, and roughly 1% raised a round at 1 billion dollars or more (Carta, via SaaStr, State of Private Markets). Who is at the helm matters too. Harvard Business School research on repeat founders puts first-time success far below serial success. The takeaway is not fatalism - it is that traction, team composition, and prior experience are the measurable levers, and the freelance and solo-founder economy increasingly feeds this top of funnel.
| Metric | Value | Source |
|---|---|---|
| Seed cohort shut down within 7 years | 62% | Carta (Class of 2018), via SaaStr |
| Seed cohort reaching Series B | 15% | Carta (Class of 2018) |
| Seed cohort raising a 1 billion dollar+ round | ~1% | Carta (Class of 2018) |
| Shutdowns Q1 2023 to Q1 2024, seed stage | +102% | Carta, 2024 |
| First-time founder success rate | 18% | Harvard Business School, via Data Driven VC |
| Previously successful founder success rate | 30% | Harvard Business School, via Data Driven VC |
| Co-founded startups vs solo | 3x more likely to succeed | Founders Forum Group, Startup Guide 2025 |
Context: previously failed founders land near 20% - better than first-timers but well below those with a prior exit (Kingscrowd; Data Driven VC).
7. The Human Cost: Founder Wellbeing
Failure statistics are also health statistics. Longitudinal research by Michael Freeman at UCSF found entrepreneurs are 50% more likely to report a mental health condition, with 30% reporting depression versus 7% of the general population (Michael Freeman, UCSF, via Founder Reports). This section reports the data neutrally and is not medical advice: the point is that runway pressure and shutdown risk carry a documented human toll, and that most regions maintain free mental-health helplines founders can reach at any stage. The 2025 layoff wave compounds the strain across the wider startup workforce, a pattern the creator-burnout data echoes among independent workers.
| Metric | Value | Source |
|---|---|---|
| Entrepreneurs more likely to report a mental health condition | 50% | Michael Freeman, UCSF |
| Entrepreneurs reporting depression | 30% (vs 7% general population) | Michael Freeman, UCSF |
| Founders reporting burnout in the past year | 54% | Sifted, 2025 |
| Founders reporting anxiety in the past year | 75% | Sifted, 2025 |
| Founders rating mental health bad or very bad | 46% | Sifted, 2025 |
| Tech employees laid off, 2025 | ~122,549 across 257 companies | Layoffs.fyi, 2025 |
| Tech employees laid off, 2024 | 152,922 across 551 companies | Layoffs.fyi, 2024 |
Context: 2025 tech layoffs fell sharply from 2024’s total, a rare bright spot in an otherwise pressured labor market (Layoffs.fyi, 2025).
Summary: Startup Failure by the Numbers
| Metric | Value | Source |
|---|---|---|
| New U.S. businesses failing within 5 years | 49.4% | BLS Business Employment Dynamics 2025 |
| New U.S. businesses failing within 10 years | 65.3% | BLS Business Employment Dynamics 2025 |
| First-year failure rate | 20.4% | Commerce Institute analysis of BLS, 2025 |
| Running out of capital as cited failure cause | 70% | CB Insights, Why Startups Fail 2024 |
| Poor product-market fit as failure cause | 43% | CB Insights, Why Startups Fail 2024 |
| Enterprise GenAI pilots with no P&L impact | 95% | MIT, State of AI in Business 2025 |
| Premature scaling among high-growth startups | 74% | Startup Genome (most recent available) |
| US VC deal value, 2025 | 339.4 billion dollars | PitchBook-NVCA, Venture Monitor Q4 2025 |
| Share of VC dollars in top 0.05% of deals | 50% | PitchBook-NVCA, 2025 |
| VC fundraising, 2025 (lowest since 2018) | 66.1 billion dollars | PitchBook-NVCA, 2025 |
| Down rounds as share of 2025 deals | 15.9% | PitchBook, 2025 |
| Venture-backed shutdowns, 2024 | 966 | Carta, 2025 |
| Series A share of 2025 shutdowns | 14% | SimpleClosure, 2025 |
| U.S. business bankruptcy filings, 2025 | 24,737 (up 7.1%) | Administrative Office of the U.S. Courts, 2026 |
| Information sector first-year failure | 28.4% (highest) | LendingTree analysis of BLS, 2025 |
| Seed cohort shut down within 7 years | 62% | Carta (Class of 2018) |
| First-time founder success rate | 18% | Harvard Business School, via Data Driven VC |
| Founders reporting burnout in the past year | 54% | Sifted, 2025 |
| Entrepreneurs reporting depression | 30% (vs 7% general) | Michael Freeman, UCSF |
| Tech employees laid off, 2025 | ~122,549 | Layoffs.fyi, 2025 |
Methodology and Sources
Data was gathered by aggregating figures from primary reports, government datasets, and named surveys published in 2025-2026, prioritizing the most recent editions and tracing trade-press figures back to their originating source. Where BLS survival percentages were computed by third parties, the analysis is attributed to that party.
- U.S. Bureau of Labor Statistics - Business Employment Dynamics (survival and entrepreneurship tables, 2025)
- CB Insights - Why Startups Fail: Top Reasons (2024) and The Top 20 Reasons Startups Fail
- Startup Genome - Why Startups Fail / Premature Scaling (most recent available)
- MIT - The State of AI in Business 2025 (reported coverage)
- PitchBook-NVCA Venture Monitor (Q4 2025; full-year tally coverage)
- Crunchbase - Global Venture Funding 2025
- Carta - State of Private Markets and startup shutdowns (Q1 2024 shutdowns; seed-cohort outcomes via SaaStr)
- SimpleClosure - State of Startup Shutdowns 2025
- Administrative Office of the U.S. Courts - Bankruptcy Filings (2026 release)
- Epiq / American Bankruptcy Institute - Commercial Chapter 11 filings (2025)
- LendingTree - Business Failure Rate analysis of BLS BED (2025)
- Commerce Institute - Business Failure Rate analysis of BLS (2025)
- Lighter Capital - 2025 B2B SaaS Startup Benchmarks
- Harvard Business School founder research (via Data Driven VC) and Kingscrowd
- Founders Forum Group - Ultimate Startup Guide 2025
- Michael Freeman, UCSF - entrepreneur mental health research (via Founder Reports)
- Sifted - Founder mental health survey 2025
- Layoffs.fyi - Tech and startup layoff tracker
- Failory - Startup Failure Rate 2026 (context for the 90% claim)
Data watch: the BLS Business Employment Dynamics release updates quarterly, with the next survival tables due in mid-2026; PitchBook-NVCA publishes its Venture Monitor each quarter (Q2 2026 next); the Administrative Office of the U.S. Courts issues quarterly bankruptcy statistics; Carta, SimpleClosure, and Layoffs.fyi refresh continuously; CB Insights and the annual founder mental-health surveys typically publish new editions each year.
Last updated: July 17, 2026.
We review and update this page quarterly as new data is published.