North West tech firms face higher-than-average risk of failure

Technology and IT businesses are amongst those with the highest risk of failure, according to figures produced by the insolvency trade body R3.

The figures show that 32% of technology and IT businesses in the North West – 4,216 companies – have a higher than normal risk of failing within the next 12 months, the highest proportion of any of the main industry sectors.

By comparison, amongst pubs and restaurants which are traditionally regarded as distressed industries, 28% of businesses have a higher than normal risk of failure while in transport and haulage, the proportion is 23%. The figures are compiled using Bureau van Dijk’s Fame Database.

Speaking at a seminar on technology businesses organised by pro-manchester and R3, Katie Gallagher, Managing Director of Manchester Digital, said Manchester was recognised as second only to London for digital industries and the city aimed to be in the global top 20 by 2020.

Paul Barber, deputy chair of R3 in the North West, said: “We are seeing many exciting developments in the digital arena and it is an area with potential to boost economic growth.

“While we may not be heading for another tech bubble, we need to recognise that many digital businesses are vulnerable. If we are to develop a strong digital sector, we need to identify the challenges they face and find ways to overcome them.”

Doug Stellman of Enterprise Ventures, an experienced technology investor, agreed that there was still funding gaps for start-up technology businesses, he said: “The key challenge remains turning an idea into a profitable business. Often companies have initial success but fail to ‘cross the chasm’ and become a bigger business.”

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