Masterplans Releases 2021 State of Startups Report

Posted in Articles by Ben Worsley

The following is an excerpt of our 2021 State of Startups report. You can read the full report FOR FREE on our website.

Read the full report

 

Any way you look at it, 2020 was a year we won’t soon forget.

 

With the COVID-19 global pandemic hanging over most of the year, 2020 also ushered in social unrest in the response to the deaths of George Floyd and Breonna Taylor at the hands of police followed by a contentious and divisive presidential election that culminated in the storming of the U.S. Capitol on January 6, 2021.

The startup environment is tied to the social and political climate, and this point was made emphatically during 2020. In March, non-essential businesses, many of them startups and small businesses, were forced to shut down by state and local ordinance, leading to mass unemployment and business closures. When restrictions eased over the summer, most businesses were allowed to reopen, but often with strict modifications to curtail the pandemic’s spread.

But through all of this adversity, the entrepreneurial spirit of the U.S. rose to the occasion. Restaurants quickly adapted to outdoor dining and contactless ordering. Retailers shifted their brick-and-mortar stores online. Offices adjusted to a decentralized remote work model. Revenues suffered for most, but the SBA’s Paycheck Protection Program (PPP), creative marketing solutions, and the quick pivot to ecommerce saved thousands of jobs.

In this fourth annual report, we analyzed all projects from 2020 to paint a comprehensive picture of the State of Startups in the United States today. Our total projects were down 13.6% in 2020 when compared to 2019. Overall, the U.S. Gross Domestic Product (GDP) was down 3.5% in 2020 according to the Bureau of Economic Analysis.

This report examines the business plan development contracts we encountered last year across industries, funding type, and demographics.

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The most common industries in 2020 were retail & consumer goods (9.3% of plans), services (9.3%), and restaurants (8.3%). Services was a new entry in the top three, after finishing 6th in 2019; it replaced cannabis, which fell to 8th. Joining services (68.1% increase) and cannabis (48.6% decrease), other notable changes from 2019 include automotive (up 60%), software-as-a-service (up 60%), hospitality (down 64.7%), wellness (down 47.6%), and healthcare (down 35.4%).

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Funding Type

 

Most clients who choose Masterplans seek capital injection to start or grow their business. In 2020, 86.2% of our projects were used to obtain outside funding. 58.4% of 2020 projects sought debt funding, typically in the form of institutional lending from banks, while 23.8% sought equity funding, often from angel investors and venture capital firms. The remaining 4% of clients looking for funding were comprised of not-for-profits seeking donations and grants.

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Demographics

 

Like the economy as a whole, the startup environment has historically been dominated by white males. Although that is beginning to change, there is still a long way to go. In 2020, clients with at least one woman founder represented 27% of our total projects, the same percentage as 2019. Of our 2020 clients, 40% identified as race other than white, up from 22% in 2019. As a veteran-owned business, 12% of our 2020 clients served in the armed forces, up from 11% in 2019.

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Geography

 

Once again, our clients came from all over the U.S., representing 45 states and the District of Columbia. Forty-five percent of our projects came from the four most populated states: California (16% of all plans), Florida (10%), New York (10%), and Texas (9%). When numbers are adjusted for population, the most entrepreneurial states in our sample were New York, Florida, Georgia, Maryland, and California, in that order.

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Tagged: news, Strategic, trends, startups, SBA, Investors
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