Carta data shows that 966 US-based startups shut down in 2024, compared to 769 in 2023, with enterprise SaaS startups accounting for 32% of the closures
Mary Ann Azevedo / TechCrunch : LinkedIn: Mary Ann Azevedo LinkedIn: Mary Ann Azevedo : “The working hypothesis is that VCs as an asset class did not get better at picking winners in 2021. In fact, the hit rate may end up being worse that year since everything was so frenzied.” …
Context & Ripple Effects
Carta’s year-end tally extends its earlier report that 254 VC-backed Carta clients failed in the first quarter of 2024, indicating that the pressure seen as boom-era funding ran out persisted through the year. It also follows estimates that thousands of venture-backed US companies closed in 2023 after a period of falling investment and limited public-market exits among venture-backed companies that shut down in 2023.
The concentration of closures in enterprise SaaS matters because it identifies a particularly crowded venture category as a major source of the washout, rather than treating startup failures as evenly distributed across sectors.
First-order effects
- Founders, employees and investors in the affected companies absorb shutdown costs, while Carta’s data records a higher annual closure count than in 2023.
- Enterprise SaaS accounts for nearly a third of the reported closures, putting that segment under the sharpest immediate scrutiny from its customers and backers.
Second-order effects
- VCs assessing portfolios and new enterprise-software investments are likely to apply the closure data to financing and follow-on decisions, especially for companies funded during the earlier boom.
- Enterprise buyers may place more weight on vendor durability and continuity planning, raising the bar for smaller SaaS suppliers competing for contracts and renewals.
Third-order effects
- If this concentration persists, the enterprise-software market could consolidate around vendors with clearer retention and financing durability, while weaker or overlapping products exit rather than continue raising capital.
- The pattern reinforces a venture cycle in which the backlog of companies financed during abundant-capital years is resolved through closures as well as selective follow-on funding; the data alone does not establish how long that adjustment will last.
The trend: The story is one data point in a venture-market reset that is testing boom-era enterprise SaaS companies against tighter funding and customer durability requirements.