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99% of Startups Fail: How to be in the 1%

Jumping into creating a startup is not for the faint of heart. According to the Small Business Administration, about 627,000 new business ventures are launched each year. Many of those are very small, mom-and-pop-type operations. However, there are also many enterprising entrepreneurs out there who dream big and set out to build empires. 

These ambitious founders often seek out help in funding, building, and scaling their ventures to successful levels. This need for a helping hand is where business accelerators like Newchip step in. 

“You have entrepreneurs who have all of these skills and years of experience, and they see an opportunity, but they still know they need some help. That’s where we come in to work with them,” says Newchip CEO Andrew Ryan.

The High Rate of Startup Failure

It’s no secret among entrepreneurs that most startups fail. In fact, 10% of startups fail within the first year, with 90% of all startups eventually succumbing to failure — and these rates are maintained across nearly all industries. Even if a new business venture is able to make it past their first year in operation, 70% never make it past their fifth.

One of the primary reasons startups fail is a lack of funding. Thousands of businesses go under every year due to challenges with cash flow and a general lack of support in scaling-up. As a result, startup accelerators are tapped by entrepreneurs to help raise capital and support their business’s growth, with the goal of staying afloat long enough to make it through the most challenging years of the startup lifecycle. Some startup accelerators, such as Newchip, even take a novel approach to venture capitalism, offering remote and online programs with experienced mentors who know what it takes for successful startups to withstand the test of time. 

“Everyone can be an investor,” says Ryan. “Everyone can be an entrepreneur, and they can do it from anywhere in the world.” According to Ryan, Newchip approaches the accelerator game by offering their services not only equity-free, but by cutting the time of their program’s process in half. For comparison, the average accelerator program can frequently take a year or longer to complete. 

Succeeding Where Others Fail

Startup accelerators are a relatively recent concept, emerging in the early 2000s to help technology-based startups compete in a saturated and highly-competitive industry. Currently, there are over 3,000 accelerators across the globe working within a variety of industries. Additionally, an uptick in new businesses launching since 2020 has left startup accelerators more in-demand than ever before. 

While the Great Resignation and the COVID-19 pandemic may have contributed to this increase in new business ventures over the past few years, issues regarding supply chains and inflation have only further complicated the contemporary business climate. Subsequently, founding and scaling a startup in this environment has come with unprecedented levels of uncertainty and complexity. As such, accelerator programs that focus on helping companies lead with flexibility and adaptability tend to generate better results for their clients. 

“There needs to be a focused and centralized vision to leverage decentralized business divisions that can adapt, move, and innovate through strong leadership and independence,” explains Ryan. “Adaptability is crucial, especially in an uncertain economy and business landscape. Businesses that learn how to pivot when necessary are more likely to beat the odds and become part of the coveted 1%.”

Cashflow Cures Most Ills 

The most common reason startups fail is tied to money — be it a lack of cash on hand, lack of revenue, or lack of interest from investors. This is where startup accelerators can step in with the experience and know-how to teach entrepreneurs how to properly scale their ventures and ultimately see them become profitable. Often, this starts with a strong business plan and a deep understanding behind the marketability of their vision. Money doesn’t solve everything, but without it, no business can not get off the ground, much less succeed long-term. 

Accelerator programs such as Newchip frequently combine courses on effectively researching an entrepreneur’s particular market and industry niche with access to investors. Without a solid foundation in what makes a business successful, what the beachhead market may or may not welcome, and how to scale beyond that formative first year in operation, businesses will be unlikely to gain access to that 1% of successful ventures. 

“I don’t believe in listening to anyone who’s never been there before,” Ryan recently said on the Action and Ambition Podcast, “there’s always someone out there who is an expert. It’s a positive thing that has come out of the internet; you can go on there and connect with people who want to do good in the world. That’s what I think we do.” 

As Ryan explains, the overarching goal of Newchip’s accelerator programs is to help coach and guide entrepreneurs along their startup journey, leaning on the experience of their expert mentors and investors to illuminate the path forward. In doing so, they help more entrepreneurs turn their dreams into reality by following their passions and build more lucrative careers.

Successful startup scaling can happen in many ways, but no entrepreneur will become successful without proper help, be it mentorship, business strategy planning, or capital investments. Tapping into these resources not only assists entrepreneurs in funding their ventures, but can help them claim a spot among the 1% of startups that go on to succeed and thrive.

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