Shocking Numbers Reveal UK Startup Decline Fueled by Pandemic Aftermath
More than 1,000 British tech startups have hit the administration, liquidation or dissolution papers since the lockdown began. This week’s study by Plexal and Beauhurst puts the pandemic‑backlash on a stark, number‑driven reality.
When the Storm Hits
After a quiet spell between April and August, September opened up a record‑breaking list of 273 fast‑growth firms filing for closure – the worst monthly figure in a decade. The overall count since lockdown hits 1,067, making the month‑on‑month jump 181 % higher than August.
Government Schemes’ Protective Shine and Where it Fades
Early‑stage companies really counted on CBILS, BBLS and the Future of Fund to ride out the crisis. But the safety net is starting to rust.
- CBILS, BBLS and the Future of Fund have worked well, but their effect is shrinking.
- New data show a rebound in failures that uncover problems the pandemic was trying to suppress.
- As the support schemes wind down, the next couple of months could decide whether the next generation of high‑potential UK startups survives.
Regional Impact
The surge is most felt in the two hottest UK startup hubs.
- London – 388 high‑growth firms have filed in total, with a 217 % jump from 30 to 95 between August and September.
- Scotland – 48 startups filed in September alone, nearly half (49 %) of the 97 total registered since April.
Investment Crunch and the Split Between Mature and New‑Age Startups
Since March, startups have raised £5.37 bn in funding – down 18 % from 2019 – but only £458 m came from first‑time raise, a 55 % drop YoY. The gap between seasoned firms and brand‑new ventures is staggering.
Voices of Concern
Andrew Roughan, Managing Director, Plexal said: “The government gave startups a lifeline at a crucial time. But the spring after the crisis is showing a pent‑up impact – especially on early‑stage startups. The support was a bandage, not a cure. It’s urgent we back the businesses that will deliver the next gigabytes of the UK’s economic revival.”
Henry Whorwood, Head of Research & Consultancy, Beauhurst added: “We’ve never seen a month with so many startup deaths as September. While filings have risen naturally with more high‑growth business numbers, the sudden spike indicates the government finance schemes are losing steam. The coming months will be crucial for the UK’s startup community.”
Moving Forward
As lockdown‑backed aids wind down, the spotlight turns to ensuring enough cash flow, attractive funding, and resilience for tomorrow’s innovators. The survival of an entire generation of creative companies is at stake, and the spotlight’s on policy makers, investors and talent. If the current wave of insolvencies swallows the next wave of breakthroughs, a lot will be lost.
Key Takeaways
- Over 1,000 startups are filing for closure since lockdown.
- September saw a 181 % jump, prompting concerns about a post‑pandemic crash.
- Support schemes are fading; the next two months are pivotal.
- LONDON and SCOTLAND each see a sharp odds‑up in filings.
- First‑time funding has shrunk by 55 % – mature firms are thriving, new ones are lagging.
- Industry leaders call for urgent continued support to spur innovation and jobs.
