# Proof: The failure rate for venture-backed startups is 70% within 10 years, lower than the commonly cited 90% for all startups.

- Generated: 2026-04-08
- Verdict: **PARTIALLY VERIFIED**
- Audit trail: [proof_audit.md](proof_audit.md) | [proof.py](proof.py)

## Key Findings

- The "70% VC-backed failure rate" in the claim is actually the BLS all-business failure rate — not a VC-specific figure.
- Ghosh/Harvard Business School (studying 2,000+ VC-backed companies) finds **75%** of VC-backed companies never return capital to investors — higher than the claimed 70%.
- The "90% of all startups fail" figure is widely cited but disputed; BLS data implies approximately 65% of all businesses fail within 10 years.
- SC2 (that 90% is "commonly cited") is confirmed; SC1 (that VC-backed rate is specifically 70%) is not supported — the figure is for the wrong population.

## Claim Interpretation

**Natural-language claim:** The failure rate for venture-backed startups is 70% within 10 years, lower than the commonly cited 90% for all startups.

**Formal interpretation:** The claim has three sub-claims: (SC1) the failure rate for VC-backed startups is approximately 70% within 10 years; (SC2) the 90% figure for all startups is "commonly cited" (not asserted as accurate); (SC3) the VC-backed rate is lower than the all-startup rate.

**Operator:** compound AND — all three must hold.

**Formalization scope:** "Failure" is ambiguous. BLS uses definition (a) — business closure/cessation. Ghosh/Harvard uses definition (b) — never returning invested capital to investors. These produce materially different rates for the same population. A VC-backed company acquired below cost is a "failure" under (b) but not (a). Mixing definitions is the central flaw in this claim.

## Evidence Summary

| ID | Fact | Verified |
|----|------|----------|
| B1 | Harvard Business School News / Ghosh: "as many as 75 percent of venture-backed companies never return cash to investors" | No (HTTP 403) |
| B2 | Inc. Magazine: confirms Ghosh 75% VC-backed failure figure | No (HTTP 403) |
| B3 | LLC.org/BLS: "Small businesses have a 70 percent failure rate within 10 years of opening" | Partial (53% similarity) |

*Source: proof.py JSON summary*

## Proof Logic

**SC1 (VC-backed failure rate ≈ 70%):** The 70% figure (B3) is the BLS all-business failure rate, not a VC-specific figure. B1 and B2 (both Ghosh/Harvard) find 75% for VC-backed companies under the "never return capital" definition — higher than the claimed 70%. SC1 fails because the claim assigns the wrong population's figure to VC-backed startups specifically.

**SC2 (90% commonly cited):** B3's source (LLC.org) confirms the 90% figure is commonly cited in popular discourse. This sub-claim holds.

**SC3 (VC rate < all-startup rate):** This comparison is undermined because SC1 fails — the 70% figure is the all-business rate, not a VC-specific rate. Comparing the all-business rate to itself is not a meaningful comparison.

*Source: author analysis*

## Counter-Evidence Search

**Check 1 — 70% is the all-businesses BLS rate, not VC-specific:** BLS Business Employment Dynamics data shows ~70% of all businesses fail within 10 years. Ghosh/Harvard (2,000+ VC-backed companies) finds 75% — higher than 70%. The claim misapplies the general rate as a VC-specific figure. **Breaks proof.**

**Check 2 — 90% figure is disputed:** Multiple fact-checks find the 90% figure is a myth. BLS data implies ~65% at 10 years. If the 90% baseline is wrong, the comparative claim is comparing against a false baseline. **Breaks proof.**

**Check 3 — Definition of failure is inconsistent:** BLS tracks closure; Ghosh tracks capital return. These produce different rates for the same population. The claim mixes definitions without disclosure. **Breaks proof.**

## Conclusion

**Verdict: PARTIALLY VERIFIED**

SC2 is confirmed: the 90% figure is indeed "commonly cited" in popular discourse (though BLS data suggests ~65% at 10 years). SC1 fails: the 70% figure is the BLS all-business failure rate, not a VC-specific figure. The best available VC-specific research (Ghosh/Harvard, 2,000+ companies) places the failure rate at 75% under the "never return capital" definition — higher than 70%. SC3 is undermined because the comparison baseline is flawed.

> Note: 3 citation(s) come from unclassified or low-credibility sources. See Source Credibility Assessment in the audit trail.

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Generated by [proof-engine](https://github.com/yaniv-golan/proof-engine) v1.11.0 on 2026-04-08.
