I think you might find that the failure rate goes down significantly with business models that are targeting smaller market segments and intend to make smaller businesses generally with the intention of just being profitable, not selling.

To take my company as an example, we are a online game specifically targeting players who were addicted to playing Diablo 2 for an extended amount of time. This is because we felt we understood what that exact market wanted better than anyone else and had a unique opportunity to deliver on it.

The intention from the start was to make a business that makes a profit, not to make a company with the intention of selling out. Infact, when we did do a capital raise at one point we were very clear in our pitch to investors that the intention was to distribute profit via dividends.

We have been successful at doing that and the project felt like a reasonably sure thing from beginning to end even when it took a lot more time and budget than we were expecting. We were 100% confident that the exact market that we were targeting existed and that they would give us money when we were done. In our minds, the only thing that could go wrong was failing to finish the product by running out of money.

Now admittedly this particular tale is probably just survivorship bias so you should take it with a grain of salt.

However, my point is just that there are a lot of little markets that VCs will not care about because they are too small. They are just waiting for someone to walk in a grab the few millions of dollars a year of profit that are sitting on the table.