New data from CB Insights sheds light on the lifespan of startup tech companies. This information is based on the firm’s database of companies that have received venture capital funding.
According to CB Insight’s analysis, the average failed tech company dies about 20 months after its last round of funding. As the firm states in its report, if tech startups “haven’t seen either more capital or an interested acquirer by the 15-month mark, things are not looking good.” Most of these failed companies had raised less than $1M in capital.
Two more interesting facts emerged from the analysis. First, the percentage of tech startups that fail has remained consistent over the last several years, and second, since 2010, 70% of all failed tech companies have been in the Internet sector. The authors noted that these figures do not include “acqui-hires” or other companies purchased for prices far below their previous valuations.
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