Startup school: How and why do tech startups fail? – SmartCompany

Starting a small business is often far more challenging than people realise, especially in the tech industry. The sector remains extremely competitive, with one of the highest business failure rates of any industry. Tech startup founders must have a solid business model coupled with a strong market need for their products or services, however that’s just the start of it.

In the fourth part of our startup school series, we dive into the failure rate and characteristics of new tech companies and suggest ways to help your business thrive.

Tech startup stats

Before diving into why startups fail, it’s important to investigate how many fail — not to deter you, but to inform you of the realities of starting a new business. We’ve all heard the startling talking point that 90% of all startups fail within the first few years, but is that true? And what about startups in tech?

In Australia, the startup failure rate across all industries was approximately 90% in 2019, according to the International Centre for Trade and Sustainable Development (ICTSD). By year, this breaks down is as follows:

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