Startup Failure Rates by Vertical

by Ben Lang, Founder of Mapped in Israel

Mapped In Israel was built on crowdsourced data from the Israeli startup ecosystem. This data contains some great great insights that we wanted to share.

Usually in the media you hear mostly about the success of Israeli startups. The stories behind Waze, Primesense or Onavo. Yet, there are also plenty of Israeli startups who don’t make it. That’s just part and parcel of the ecosystem. There’s a lot to learn out there from these failed companies so we we’ve decided to focus on this less glamorous side of the Israeli high tech.

B2B Vs B2C

Many entrepreneurs debate whether to go B2B or B2C. It’s often a critical decision when starting a company. In 2013, the failure rate among Israeli B2C startups was almost more than double that of B2B startups. 16% of B2C companies shut their doors. On the other hand, 9% of B2B companies closed.

Casualties by Verticals

We noticed some major differences in the “mortality rate” per vertical. Here are some stats on the yearly failure rate per verticals during 2013.

The analysis is based on about 180 companies that closed their doors in 2013 out of a pool of 1100 companies.

  •  eCommerce: 5%
  • Advertising Technologies: 9%
  • Enterprise Solutions: 10%
  • Hardware and Semiconductor: 10%
  • Biotech / Medtech / Cleantech: 11%
  • Mobile Technology and Apps: 13%
  • Social Media: 17%
  • Consumer Web / Games: 21%

Does this mean that building an e-commerce startup is the way to go? Not surprisingly, the old rule of risk reward seems to hold true again. Typical Ecommerce startups are SAAS with limited upside. On the other side of the spectrum, the verticals with higher failure are the ones which have lead to the most spectacular exit such as Waze and Viber.

2014-06-10T15:57:33+00:00June 10th, 2014|General|0 Comments