Start-up Failures Surge by 60% Amid Post-Boom Challenges

• Start-up failures in the US have surged by 60% over the past year as founders deplete funds raised during the 2021-22 tech boom, risking millions of jobs and potential economic spillover.
• Data from Carta shows a sharp rise in start-up shutdowns, with 254 venture-backed clients going bust in Q1 2023, a rate over seven times higher than in 2019.
• High-profile casualties include Tally, Caffeine, Olive, Convoy, and WeWork, all struggling to secure necessary funding amid a challenging financial environment.
• The rise in bankruptcies is attributed to inflated valuations and misaligned incentives during the boom years, with VC investment and venture debt plummeting post-Silicon Valley Bank collapse.
• Despite a bleak outlook for many sectors, investment in AI start-ups is booming, with three-quarters of Kruze's $2bn raised in 2024 going to AI ventures, highlighting a shift in VC focus.

Source: Financial Times