According to a September 2012 article in The Wall Street Journal, the “common rule of thumb is that of 10 start-ups, only 3–4 fail completely.” The National Venture Capital Association believes 25–30% of venture-backed businesses fail. There are different definitions of “failure.”
If “failure” is defined as an investor losing 100% of his investment in venture capital, it is likely 30–40% of high-potential start-ups fail. However, if “failure” is described as investors not getting the kind of projected return (e.g., a certain growth rate or return of principal by a specified date), then > 95% of start-ups fail.
According to a Harvard professor, venture-backed companies tend to fail after their fourth year—when investors have stopped adding money to the business. Looking at all U.S. start-ups, ~ 60% survive for years and last ~ 10 years (source: U.S. Bureau of Labor Statistics). Of those that do not “survive,” some are acquired, and others simply languish. According to Dow Jones, of the over 6,600 U.S.-based companies initially funded by venture capital from 2006 and 2011, 84% are currently independently operated, 11% were acquired or had an IPO, and 4% went out of business.