Data released this week revealed that 92% of startups launched since 2020 have shuttered, as reported by Crunchbase, placing the spotlight on why most startups fail—startling even seasoned backers like Y Combinator Ventures ($YCVC). What explains this dramatic shakeout, and why are serial entrepreneurs bucking the trend?
Startup Failures Surge: 92% Shutter by Year Five, Says Crunchbase
Crunchbase data shows that between January 2020 and September 2025, 92% of the nearly 142,000 global startups closed operations or were acquired at valuations below their primary funding. Of the venture-backed cohort, only 7% achieved a notable growth event (defined as a Series C or major exit). Seed-stage funding volume fell by over 40% year-on-year from Q2 2022 to Q2 2025, per PitchBook. Major accelerator Y Combinator Ventures ($YCVC) reported that fewer than 1 in 10 of its S21 and W22 batches reached profitability by late 2024, highlighting sector-wide headwinds.
Why the Startup Ecosystem Faces Structural Risks in 2025
The startup market downturn has wider implications for venture funding, innovation pipelines, and labor markets. According to CB Insights, tech sector layoffs exceeded 180,000 in the first three quarters of 2025, the largest since the 2016 funding contraction. Global venture funding fell to $321 billion in 2024, a 35% drop from 2022. Rising interest rates and tightening liquidity—tracked by the Federal Reserve’s policy rate hike sequence from 0.25% in March 2022 to 5.50% by July 2024—have pushed investors toward established assets over speculative growth bets. These shifts echo the pattern seen in the post-dotcom era, where similar credit constraints triggered mass startup closures and industry resets.
How Serial Entrepreneurs Beat Startup Failure With Proven Playbooks
Experienced founders increasingly defy these odds, exploiting insights from past ventures to pivot quickly, streamline burn rates, and secure alternative funding. According to Startup Genome’s 2024 Global Startup Ecosystem Report, companies led by serial founders are 2.8x more likely to raise a subsequent round and 3.5x more likely to achieve a profitable exit compared to first-time founders. Veteran teams focus on capital-efficient models, rapid product-market fit validation, and resilient talent management. For investors navigating the turbulent landscape, backing serial teams and applying rigorous due diligence—along with tapping stock market analysis and latest financial news—emerge as critical strategies. Asset managers also recommend portfolio diversification across later-stage private equity, indicating a defensive position for startup-focused allocations amid tightening venture cycles.
Experts Predict Select Serial-Backed Startups Will Outperform
Market consensus suggests that seasoned, adaptable founders will continue outperforming peers amid ongoing market volatility. According to analysts at PitchBook and industry observers at the National Venture Capital Association, startups with experienced leadership, differentiated IP, and prudent cost management are best positioned for potential exits in 2026 and beyond. Industry analysts observe that, despite macro headwinds, cycles of innovation typically produce outlier successes—often spearheaded by repeat founders with playbook-driven approaches.
Why Most Startups Fail—and How Investors Can Spot Survivors Next
The startup sector’s 92% five-year failure rate in 2025 underscores the importance of founder experience and adaptable execution. As investors assess the next cycle, closely watching serial entrepreneurs and applying the lessons on why most startups fail is essential. Targeted due diligence and sector diversification will be key as the funding landscape continues to evolve.
Tags: startups, failure rate, YCVC, venture capital, serial entrepreneurs
