There is no reliable "indie hacker failure rate". The number everyone quotes, "90% of startups fail", has no solid primary source. What the data does show: about 1 in 5 new U.S. businesses closes within a year and roughly two thirds within ten years (BLS). Among VC-backed startups that shut down since 2023, 70% ran out of money and 43% never found product-market fit (CB Insights, 2026). For indie hackers, the lesson is the same: most products die from building something nobody pays for, not from bad code.
Key Takeaways
- The "90%" figure is folklore. It gets repeated everywhere, but we couldn't trace it to a study that measures indie hackers or software founders. Treat it as a vibe, not a statistic.
- Most new businesses don't last ten years. Roughly 20% of new U.S. business establishments close in their first year, about half by year five, and around two thirds by year ten. (U.S. Bureau of Labor Statistics)
- Software is harder than average. In the information sector, which includes software publishers, only about 20 to 30% of new establishments are still around ten years later, depending on the year they opened. (BLS, Business Employment Dynamics)
- No product-market fit is the root cause. In CB Insights' March 2026 analysis of 431 VC-backed shutdowns, 70% ran out of capital, but the causes behind that were poor product-market fit (43%), bad timing (29%) and unsustainable unit economics (19%).
- People problems kill teams. Noam Wasserman's research on about 10,000 founders found that 65% of high-potential startups fail because of conflict among co-founders. (The Founder's Dilemmas)
- Shutdowns went up after the funding boom. Carta recorded 966 shutdowns among U.S. startups on its platform in 2024, up 25.6% from 769 in 2023.
Table of Contents
- Where "90% of Startups Fail" Comes From
- What Government Data Says About Survival
- Why Startups Actually Fail: No Market Need
- People Problems and the Solo Founder Trade-off
- What This Means If You're Building Alone
- Methodology
- Sources
Where "90% of Startups Fail" Comes From
Search for indie hacker or startup failure rates and you'll see 90% everywhere, usually with a link to another article that also quotes 90%. We couldn't find the study underneath. It isn't from the BLS, it isn't from CB Insights, and there's no public dataset that tracks indie hackers or solo software founders from launch to outcome.
That doesn't mean the number is wildly wrong. Most side projects never make meaningful money, and anyone who has spent time in indie hacker communities has seen far more launches than lasting businesses. But "most" is as precise as the honest answer gets.
An earlier version of this article cited several statistics, including the 90% figure, from sources we could not verify. We removed them in September 2026 and rebuilt the article on the sources listed at the bottom.
What Government Data Says About Survival
The best long-running data on business survival comes from the U.S. Bureau of Labor Statistics, which tracks every private business establishment by the year it opened. These aren't startups in the Silicon Valley sense. They include restaurants, shops and consultancies. But the pattern is consistent across decades.
| Time since opening | Share still in business (all U.S. industries) | Source |
|---|---|---|
| 1 year | About 80% | BLS Business Employment Dynamics |
| 5 years | About 50% | BLS Business Employment Dynamics |
| 10 years | About 33% | BLS Business Employment Dynamics |
The information sector (NAICS 51, which covers software publishers, data processing and internet businesses alongside media and telecom) does worse. Depending on the opening year, only about 20 to 30% of new information-sector establishments are still operating ten years later.
Two caveats matter. First, closing isn't always failing: some businesses are sold, merged or shut down on purpose. Second, a one-person software product often never registers as an "establishment" at all, so the true survival rate for side projects is unknown and probably lower.
Why Startups Actually Fail: No Market Need
CB Insights has analyzed startup post-mortems for more than a decade. Its March 2026 report looked at 431 venture-backed companies that shut down since 2023. The categories overlap, because most failures have several causes.
| Reason cited | Share of closures with a known reason | Source |
|---|---|---|
| Ran out of capital | 70% | CB Insights (2026) |
| Poor product-market fit | 43% | CB Insights (2026) |
| Bad timing or macro conditions | 29% | CB Insights (2026) |
| Unsustainable unit economics | 19% | CB Insights (2026) |
Running out of money is how startups die, not why
CB Insights treats "ran out of capital" as the final symptom and poor product-market fit as the most common root cause. CB Insights, 2026
These are funded companies, not indie hackers. Still, the pattern maps directly onto solo builders. If you're bootstrapping, "ran out of capital" means you ran out of savings or patience before revenue showed up. And the reason revenue didn't show up is usually the same: the product solved a problem people weren't willing to pay for.
The classic trap is building first and asking later. AI coding tools made it worse in one way and better in another. Worse, because you can now build a polished product in a weekend without ever talking to a customer. Better, because the cost of testing an idea has dropped close to zero, so there's less excuse not to test several.
People Problems and the Solo Founder Trade-off
Harvard Business School professor Noam Wasserman studied close to 10,000 founders for The Founder's Dilemmas. His most-quoted finding: 65% of high-potential startups fail because of conflict among co-founders, over equity, roles, direction or commitment.
Going solo removes that risk and replaces it with others:
- No sounding board. Bad ideas survive longer when nobody pushes back.
- Skill gaps. Most technical founders are weak at sales and marketing, and there's no co-founder to cover it.
- Burnout. Everything depends on one person's energy.
Solo is also the norm, not the exception. According to the U.S. Small Business Administration, the large majority of U.S. small businesses (roughly four in five) have no employees at all.
What This Means If You're Building Alone
The data points at a few habits that improve your odds more than any tool:
- Validate before you build. Talk to potential customers, pre-sell, or run a landing page test. The most common cause of failure is also the cheapest to check.
- Pick a narrow audience. A specific group with a specific problem is easier to reach and easier to charge.
- Keep costs close to zero until revenue shows up. For bootstrappers, runway is time, and time is what you need to find product-market fit.
- Find your sounding board. A peer group, a community or a mentor replaces some of what a co-founder gives you.
- Learn from people a few steps ahead. Founders who share real numbers are the closest thing to a playbook.
For that last point, a few YouTube channels are worth following:
- Starter Story: Solo founders break down how they built their products, with real revenue numbers and tech stacks.
- Greg Isenberg: Startup ideas and the AI tools founders use to test them fast.
- Y Combinator: Advice on product-market fit, talking to users and early growth from YC partners.
- My First Million: Business models and founder stories, often from outside the usual tech bubble.
Methodology
We used primary or first-party sources wherever possible: BLS Business Employment Dynamics tables for establishment survival, CB Insights' March 2026 report for shutdown reasons, Carta's shutdown data as reported by TechCrunch, and Noam Wasserman's published research. Survival rates are rounded because they vary by opening year. BLS data covers all business establishments, not just software startups, and CB Insights covers VC-backed companies, not bootstrapped ones. Neither measures indie hackers directly, and as far as we know no reliable dataset does.
Sources
- U.S. Bureau of Labor Statistics. Business Employment Dynamics: Establishment Age and Survival Data, including Table 7 for the information sector (NAICS 51). bls.gov/bdm/bdmage.htm
- CB Insights. The top reasons startups fail (March 2026), analysis of 431 VC-backed shutdowns since 2023.
- Carta shutdown data for 2023 and 2024, as reported in TechCrunch, "2025 will likely be another brutal year of failed startups, data suggests" (January 2025).
- Wasserman, Noam. The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton University Press.
- U.S. Small Business Administration, Office of Advocacy. Frequently Asked Questions About Small Business.
Frequently Asked Questions
What percentage of software startups fail in their first year?
There's no software-specific first-year number we trust. Across all U.S. industries, about 20% of new business establishments close within their first year, according to the Bureau of Labor Statistics. Over ten years, the information sector (which includes software) does worse than average: only about 20 to 30% of new establishments survive.
Is it true that 90% of indie hackers fail?
The 90% figure is widely repeated, but we couldn't trace it to a study that measures indie hackers or software founders. Most side projects clearly never become sustainable businesses, but no reliable dataset tracks indie hackers from launch to outcome, so any precise percentage is a guess.
Why do most indie hackers fail?
Mostly for the same reason funded startups do: they build something people won't pay for. In CB Insights' 2026 analysis of 431 VC-backed shutdowns, 70% ran out of capital, but the most common root cause was poor product-market fit (43%). For bootstrappers, running out of capital means running out of savings or patience before revenue shows up.
Are solo founders more likely to fail than teams?
There's no clean answer. Solo founders avoid co-founder conflict, which Noam Wasserman's research links to 65% of high-potential startup failures. But they carry every skill gap and all the workload alone, which raises the risk of burnout and blind spots. A peer group or mentor covers part of that gap.
How can indie hackers improve their odds?
Validate demand before building, pick a narrow audience with a specific problem, keep costs near zero until revenue shows up, and learn from founders a few steps ahead of you. Channels like Starter Story, where solo founders share real revenue numbers, are a good place to start.
Market Research Team
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