I was recently asked by an entrepreneur about the success rate for startups. I didn’t have anything on hand at the time, but have since come across an NVCA study that speaks to the success rate for VC backed companies.

Unfortunately, I don’t have the success rate for companies that are not venture backed, but I suspect that the success rate is lower for these companies. While not all companies need venture backing, companies that do need institutional capital and don’t receive the resources that they need are less likely to compete effectively, meaning that all of the un-funded companies are likely to weigh down the success rate of this category.

According to the data below, about 45% of VC backed companies exit. However, it’s important to note that some of the exits in the ‘acquired’ category aren’t very profitable, just returning invested capital (or even less). As a result, the real wins are likely to be a subset of the 45% number. My gut tells me that the right number is about 33%; 1 out of 3 VC backed companies has a profitable exit.