Start-up failures have surged by more than 60% in the past year

Five charts to start your day

As someone about to become a tech founder, this chart caught my eye – I couldn’t help it. It’s the sobering truth. There is a high risk of failure when launching a venture and with that failure comes a lot of pain. If you’re young and carefree, perhaps that doesn’t matter. But if you have a family to look after and bills to pay, then this is something that will keep you up at night.

Startup failures shot up last year, rising to a staggering 60 percent. Many of these failures are tech companies, revealing the exposed fragility of the VC ecosystem, built on the heady optimism that private asset investors have had in the sector for years.

While AI continues to attract billions in funding, creating a mirage of prosperity, the broader picture is far bleaker. Companies like Tally, once valued at $855 million, have become victims of their own inflated valuations.

This isn’t merely a tech sector problem; with VC-backed firms employing 4 million Americans, the potential for economic contagion is alarming. The tech industry’s boom-and-bust cycle, fuelled by misaligned incentives and unrealistic growth expectations, now threatens to leave a trail of unemployment and shattered dreams in its wake. I just hope my venture won’t become part of this.

Source: Financial Times

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