Surveys

75% of Startups Aren’t Raising Capital. Here’s Why.

In today’s startup market, founders aren’t just failing to raise capital, they’re increasingly choosing not to try.

In a survey of 700+ respondents, 55% of new businesses chose not to pursue funding at all, while another 20% attempted and failed. That means 75% of startups in this sample never successfully raised outside capital.

Among those who struggled to raise funding, 45% cited weak traction or insufficient metrics as the primary reason.

The Shift: From Traction to “AI or Nothing”

When founders were asked why fundraising didn’t happen, a different pattern emerged:

21% said investors are only backing AI-focused companies
18% said valuations are too low to make fundraising worthwhile
17% said the market is too risk-averse

In other words, more than half of respondents pointed to external market conditions, not just business performance.

A Harder Market Than Founders Expected

The broader economic backdrop isn’t helping.

Ongoing instability tied to the U.S.-Iran War has introduced volatility through rising fuel costs, disrupted supply chains, and reduced business investment. For early-stage founders, this translates into a tougher fundraising environment and fewer risk-tolerant investors.

Even among those entering the startup ecosystem, (60% of respondents said they or someone they know started a business in the past two years) there’s a growing awareness that not all startups are equally fundable anymore.

Startups without AI integration, proprietary data, or breakout early traction are increasingly seen as higher risk in a market that’s already risk-averse.

Methodology

Q1: In the past two years, have you or someone you know started a business?