Member Article

Over 60% of the capital’s startups fail in their first five years according to research

The capital may be the place to be for budding entrepreneurs, but research released today has highlighted the double-edged sword that such a fertile startup scene represents for London’s businesses.

A study by B2B marketplace Expert Market, which used figures from the Office of National Statistics (ONS), has found that 61.4% of the capital’s startups failed within their first five years between 2009 and 2014.

The figure represents the highest failure rate in the whole of the UK, with the North East (59.8%) and Northern Ireland (60.3%) also posting high rates of failure amongst its startups.

Evidently, the opportunities for investment, networking and collaboration afforded to entrepreneurs in London also comes with significant downsides, such as greater competition as companies vie for exposure and funding.

The study also looked into the failure rates of specific industries and found that startups in the accommodation and food services industry faced the toughest market prospects, as 66% of businesses within the sector failed within their first five years.

New businesses in the health and education sectors fared better, with only 48% and 49% of startups failing respectively in those sectors.

It is is not all bad news for London’s startups however, as the figures also showed that the highest total number of businesses which were founded in 2009 were still in business in the capital five years down the line.

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