90% of Startups DO NOT Fail! Stop spreading this lie.

I advise corporate executives on startups and innovation. They think 90% of startups fail.

The “90% failure” stat helps executives sleep better. It is a lie.

This stat was from VERY old data. I researched the latest available data.

Corporations are not competing against SBA defined new small businesses like nail salons or restaurants. So I narrowed my research to data from venture-backed startups as this is more analogous to funded corporate innovation programs.

The first data I found was from Cambridge Associates, a global investment firm based in Boston. They tracked the performance of venture investments in 27,259 startups between 1990 and 2010. Its research revealed that the failure rate of venture-backed startups was LESS THAN 60% (failure = 1X return or less to investors).

But even this data has a huge problem. Both the corporate innovation and startup world have dramatically changed in the past 10 years.

Here is a sampling of the major changes that have happened in the past ten years: • Inexpensive/free software • On-demand cloud computing • Rapid prototyping • 3D manufacturing • Outsourced manufacturing • Inexpensive supply chain • Ecommerce extending reach to global customers • Plentiful funding options • Inexpensive/free marketing • Availability of global talent • Public companies failures are magnified and successes marginalized To fairly compare corporate innovation to startup company success we need to look at contemporary data from the past ten years.

When it comes to comparing startup innovation to corporate innovation I prefer to look at the data from mentor-based startup seed accelerators.

The reason I use this data is that there are natural analogous comparisons between startups in seed accelerators and corporate innovation teams.

I choose to focus on the top 2 seed accelerators Y Combinator and Techstars.

The data above shows the average failure rate is 11%. Almost the exact opposite of what most corporate executives have been told by their innovation consultants.

This is significant.

When ideas are vetted correctly and given the right environment, with the right assets made available to help it grow and thrive, the success rate for startups is 89%.

This number might be misleading at first. The average exit rate above is only 13.5% but the other 75.5% of startups that went through these 2 programs (2867 of them) are still in business. These startups are operating businesses and are still adding value.

The companies that have exited Y Combinator & Techstars have caused massive disruption to whole markets of large corporations.

Here are just a few examples:

Airbnb disrupted the hospitality space.Stripe disrupted the credit card space.Dropbox disrupted the documents space.Coinbase disrupted the finance space.Instacart & Doordash disrupted the delivery space.

The company I love to talk about is PillPack. PillPack was founded in 2013 and went through the Techstars program in Boston. Five years later it was purchased by Amazon for $1 billion. After the deal was announced, CVS Health, Rite Aid and Walgreens jointly lost more than $10 billion of market cap. Can you imagine a corporate innovation that would be worth $1 billion and at the same time able to wipe out $10 billion in market cap of competing companies?

Sorry if this contemporary stat keeps you up at night.

I would love to read your opinion.

Mike StempleCEO & Founder, InspirerOn Linkedin