How many tech firms were created and went out of business in 2001?

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Request for Question Clarification by thx1138-ga on 03 Oct 2002 11:53 PDT

Hello iconocast,

In any particular country?

Regards
THX1138

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Clarification of Question by iconocast-ga on 03 Oct 2002 12:14 PDT

in the U.S. of course. Sorry

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Request for Question Clarification by haversian-ga on 03 Oct 2002 23:27 PDT

Would you consider businesses filing for bankruptcy, businesses bought
up by larger competitors, businesses mergirg, etc. to be closings?

What about 'tech firms'?  Are you referring to just computer-related
technologies, or do biotech firms, medical firms, or the like count as
well?

This is a little difficult to quantify, inasmuch as what's a 'tech'
firm is open to variation.  Undoubtedly amazon.com is a tech firm --
but are all on-line booksellers tech firms?  And with more than 20
million businesses in the U.S., what's the threshold size?

But there are firms that track this kind of information.  Indeed The
Industry Standard was a popular publication that ran statistical
summaries of tech startups -- until it went out of business in
September, 2001.  "The Industry Standard Suspends Publication"
(August, 2001) tells its story:
http://www.thestandard.com/article/0,1902,28744,00.html

Let's start with significant venture-capital funded companies. 
VentureOne Corp. tracks both venture capital and private placements in
companies.  Their data cover fundings (and a company may return to the
market for more than one round of funding, usually several years
apart) but is used to watch significant start-up activity.  VentureOne
has followed venture funding since the 1980s.  Here are their numbers
for 2001:

Number of Financing Rounds:

Healthcare: 535
Information Technology: 1,772
Products & Services: 637
Other: 41

TOTAL: 2,985

TOTAL 1996: 1,898
TOTAL 1997: 2,169
TOTAL 1998: 2,502
TOTAL 1999: 4,501
TOTAL 2000: 6,046
TOTAL 2002 (through June): 1,059

These numbers were taken from "Equity Financings for Venture-Backed
Companies, by Industry Group" (July. 2002):
http://www.ventureone.com/

A different company keeps information on significant technology
failures -- as well as mergers and acquisitions, which can be used to
salvage a failing firm's assets.

Webmergers.com tracks technology company transactions and closures. 
In 2001 they reported 544 shutdowns of Internet businesses.  They note
in their current report "Dot Com Failures Down 74% from 2001 Levels in
1st Half" (undated) that the dot com death rate is between 7-10% of
the total:
http://www.webmergers.com/editorial/article.php?id=60


Webmergers.com also tracks acquisitions.  Though they could be
acquisitions of successful or unsuccessful companies, in 2001 there
were 1,289 acquisitions worth $39.7 billion.  In the first half of
2002, there were 646 companies acquired ($12.7 billion) versus 660 in
the first half of 2001 ($22.4 billion).

Google search strategy:
"high technology" + startups
"high technology" + failures
Best regards,

Omnivorous-GA

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Request for Answer Clarification by iconocast-ga on 04 Oct 2002 08:14 PDT

The venture funded firms I know about, it's total technology start-ups
that I'm looking for. Venture-funded firms are only a small part of
that.

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Clarification of Answer by omnivorous-ga on 04 Oct 2002 10:20 PDT

Dun & Bradstreet (D&B) had been producing a report on business starts
and failures through 1997, but no longer makes that available on the
web.  These reports break down businesses by the classical industry
categories (agriculture, mining, manufacturing, etc.)

D&B also had a specific report on IT business starts that they ran
from 1995 through 2000, but it too has been discontinued.

The last available report was "IT Business Starts Rising in the US,
Driven by Communications Sector" (Oct. 12, 2000) which reported:

1999 TOTAL Startups: 151,016
1999 IT Startups: 10,795
* computer: 7,834
* communications: 2,961

2000 (Jan-June)
2000 TOTAL Startups: 62,549
2000 IT Startups: 5,237
* computer: 3,481
* communications: 1,756

A Small Business Administration FAQ from June, 2000 lists these total
numbers for 2001:
New businesses: 574,500
Closures: 585,800
Bankruptcies: 39,719

There are no breakouts of the SBA data by industry or classification:
http://www.sba.gov/advo/news/june02.pdf

There is an E-commerce measurement program started by the Census
Bureau with data through 2000 but it only covers use of technology in
existing industries.

The U.S. Census Bureau conducts a 5-year census of U.S. business, the
next one being in December, 2002 (to cover the 1997-2002 period). 
Unfortunately, data for the period that you're interested in doesn't
appear until mid-2003 at the earliest.  The good news is that it's
broken down by SIC code -- allowing you narrow selection criteria for
what gets included.

Best regards,

Omnivorous-GA

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Request for Answer Clarification by iconocast-ga on 04 Oct 2002 12:50 PDT

Bottomline, it looks like my question of 2001 U.S. tech start-ups and
closures can't be answered, correct?

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Clarification of Answer by omnivorous-ga on 04 Oct 2002 14:53 PDT

Iconocast --

I've come about as close as data on the Internet allows.  It's very
disappointing to see D&B not make their business startup/failures
reports public -- until the late 1990s lots of people relied upon it
for business information.  Since D&B surveys most public and private
businesses, it was pretty complete.

New U.S. Census business surveys offer some hope for next year.

The VC numbers are probably a pretty good guideline for percentages of
tech firms, though obviously the floor for a VC investment is probably
in the $3-$5 million range.

Best regards,

Omnivorous-GA

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Clarification of Answer by omnivorous-ga on 21 Oct 2002 20:01 PDT

Google and its researchers rely on ratings for a sense of how we're
performing.  Please take the time to rate your question, giving it 5*
if it met your needs!

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Request for Answer Clarification by iconocast-ga on 03 Nov 2002 17:18 PST

While I do appreciate all your work, I'm going to have to repost this
question, because this is not the answer I'm looking for.

Sorry.

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Clarification of Answer by omnivorous-ga on 03 Nov 2002 17:54 PST

That's fine.  You may wish to reference this answer or to refine the
question to get what you need!

Best regards,

Omnivorous-GA

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