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VerdictMisleading3 sources
Common claim· Small business

Nine in ten startups fail.

About half of new US workplaces close within five years; venture-backed failure is put at 60 percent or less since 2001. We found no source for 90 percent.

VerdictMisleadingContains some truth but leads you to a wrong conclusion.3 sources · Updated 18 October 2026
3 sourcesHow we rate claims
Ten potted seedlings, about half thriving: about half of new US workplaces survive five years, not one in ten.
About half of new workplaces are alive after five years. Photo: The Realigned

Where you’ve heard it

More than 90% of startups fail, due primarily to self-destruction rather than competition.
Steve Blank, blog post on the Startup Genome Compass, 29 August 2011.View original
Nine out of 10 startups fail.
Fortune, Erin Griffith, 27 June 2017, stating the claim as conventional wisdom before arguing the data say otherwise.View original

“More than 90% of startups fail, due primarily to self-destruction rather than competition.” — Steve Blank, blog post on the Startup Genome Compass, 29 August 2011. Read the post.

“Nine out of 10 startups fail.” — Fortune, Erin Griffith, 27 June 2017, stating the claim as conventional wisdom before arguing the data say otherwise. Read the article.

Why people believe it

The strongest case for the claim
Failure is common and the number feels right. Roughly half of new private-sector workplaces are gone within five years and about two thirds within ten, so most new businesses do not last a decade. If failure means a venture-backed company not returning the capital its investors put in, the share is large, and in the dotcom bust it reached 79 percent. A fair reading is that most new firms do not become large lasting companies, and the nine in ten line captures that.
Held by many founders, investors and startup commentators. Source 1 (opens the source in a new tab)
Is this fair to that view?

What the evidence shows

No one number answers this, because “startup” and “fail” can each mean several things. Start with every new business. The Bureau of Labor Statistics (BLS) tracks private-sector establishments, meaning individual workplaces, by the year they open. For those opening in the year to March 2014, 50.8 percent were still operating after five years and 34.9 percent after ten1.1 That is a high rate of closure, but closer to one in two at five years than nine in ten. See the BLS survival table.

Key figure50.8%Share of private-sector establishments opened in the year to March 2014 still open five years laterSource 1 · BLS Business Employment Dynamics (opens the source in a new tab)

Two cautions apply to that table. An establishment is a workplace, so a new branch of an old company counts alongside a new firm. And BLS counts a closing by employment records: an establishment closes when it reports no employment, a rule that does not say whether the owner failed, sold up or moved on.2 Neither point makes the closure rate smaller, but both stop it being read as a count of bankruptcies.

Now take venture-backed startups, the kind that the phrase usually has in mind. In 2017 Fortune reported analysis by the investment firm Cambridge Associates of 27,259 venture-backed startups between 1990 and 20103, counting as failures those that returned 1X or less to investors. The share has not risen above 60 percent since 20013, and it peaked at 79 percent in the dotcom bust.3 Fortune’s own conclusion was that the nine in ten claim is not true. That is one firm’s data, not every startup, and because “1X or less” is the test, a company that only returns the money invested counts as a failure. See the Fortune column.

Where does 90 percent come from? In the pages we opened, we found no source or measurement for it: the 2011 post above states it as a plain assertion, and Fortune calls it conventional wisdom and says it is not true. What is not known is the original source of the figure, and whether any dataset has ever measured “startups”, “failure” and “nine in ten” together.

The better question

Of businesses like this one, with the same funding and industry, what share survive five years, and how is survival defined?

Sources

  1. 1Table 7. Survival of private sector establishments by opening year (opens the source in a new tab) · BLS Business Employment Dynamics, 2025 · Dataset
  2. 2Business Employment Dynamics: frequently asked questions (opens the source in a new tab) · BLS, 2025 · Primary source
  3. 3Conventional Wisdom Says 90% of Startups Fail. Data Says Otherwise. (opens the source in a new tab) · Fortune, 2017 · Reporting
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