Expectations of Startup Failure

I wrote the following response to an anonymous Wiselike question this week. I figured it could help other entrepreneurs that might be experiencing a similar thing.

Nothing sucks more than missing an open shot. But failure is a crucial part of life experiences.

Nothing sucks more than missing an open shot. But failure is a crucial part of life experiences.

There are rough figures out there that paint the most realistic picture of failure. Some of them are as follows....

48.8 percent of small businesses opened since 1977 never make it to age 5. As an investor, that could mean 4 years of time plus capital loss.

Forbes reports that 8 out of 10 businesses opened fail within the first 18 months. That sounds like a quicker burn, but 80% suggests how common this is.

Inc. shared a metric suggesting that 96% of all new companies fail before year 10. This means that building a long term business model is extremely uncommon and difficult.

But these are all general statistics. You launched a startup within an accelerator. Angel investors were counting on you and your team. In your eyes, you laid out unique expectations that should have defied these metrics. Right?

The reality of the situation is that no matter the startup, 92% of them have to close their doors within 3 years. This aligns with my usual expectation as an investor. I always say that I expect 9 out of 10 of my companies to fail. However, my hope is that the 10th one is a unicorn, and that it's success heavily outweighs the failure of the other 9.

I urge you to think like an investor might. Did the investors have faith in you and your startup? Of course. They wouldn't have thrown money at you if they didn't. Did they expect to make 10x returns from your company? Probably not.

Don't beat yourself over this. Learn from the experience and try it again when you're ready. You didn't con or trick anyone out of their money. As long as you put forth the necessary effort, investors will give you another shot when you have your next stellar startup idea. It's even riskier for them to ignore you after everything you've learned this time around.