A year on from the collapse of Silicon Valley Bank, startup companies are falling into insolvency at the fastest rate in a decade

Startups are an important aspect of the UK corporate ecosystem, it is important for the health of the overall UK economy that we have an environment where startups are capable of succeeding. Analysis that PwC has undertaken suggests that many startups are failing and as a consequence founders and shareholders need to take a more proactive approach to securing the funding required to deliver a sustainable future. Read the below for more information.


It has been a year since the collapse of Silicon Valley Bank (SVB) and last year saw the highest number of insolvencies of startup companies in a decade, according to new PwC analysis. In total there were 12,841 startup insolvencies – equating to 51% of the 25,158 total. Despite this being the lowest proportion of startup insolvencies in a decade, the overall number is the highest it has been in the same time period.

Chart 1 – Total startup and non startup insolvencies by year

Data source: The Insolvency Service

One of the immediate consequences of the failure of SVB was a hardening of risk appetite. As a consequence, it is becoming increasingly difficult for startup companies to obtain additional equity and debt funding, particularly where the underlying concept has not yet been proven and where the company has exhausted cash from earlier fund raisings. We continue to see an uptick in companies requiring broader strategic, funding and restructuring support and guidance as they continue to face challenges.

Of the total insolvencies in 2023, which was an increase of almost 14% compared to 2022, approximately 98% were for companies with less than £1m annual turnover. These companies failed to reach the benchmark typically used across the venture capital market to prove a business has product market fit, is scaling-up and ready to undertake ‘Series A+’ fundraising. Delving deeper, data shows that more than half of the overall insolvencies (51%) were startup companies.

At a regional level, it is widely commented across the market that there is an uneven level of venture capital investment across the UK and that the ‘golden triangle’ of London, Oxford and Cambridge receives a significant share of venture capital investment. However, this is changing as funds, including those from the government, focus on diversity and inclusion and growing epicenters of innovation.

Chart 2 – Total startup insolvencies in 2023 by geographical region

Data Source: The Insolvency Service

John Baker, a startup specialist at PwC, has commented that startup businesses have faced many challenges in 2023; including securing funding following a sharp retrenchment in venture capital availability, a cool-down in the IPO market, talent acquisition and staff retention, and macroeconomic volatility including inflation and the impact of borrowing costs, particularly for their customers. This is reflected in the overall increase in startup insolvencies in 2023.

John also notes that many startups have seen the writing on the wall for funding availability and have taken steps to preserve cash and rightsize their businesses to extend runway. This often includes difficult and painful decisions such as reducing headcount, pausing development and product launches and reducing marketing spend – all having a significant impact on growth.

Businesses which raised funds towards the end of the low interest rate environment are well placed to maximise the impact of their capital, compared to a significant number of bootstrapped or venture backed startups which will need to re-raise funds over the next twelve months – a growing hurdle as funding rounds are taking longer and becoming more challenging to complete, given investor tightening of belts and criteria.

Many businesses adapted fast and got lean during 2023. However, many have utilised their high impact levers, so will need to be disciplined and creative in 2024 with their operations and financing to return to growth. The latest overall insolvency figures will be concerning reading for many startups as February 2024 showed a material increase on January 2024 (2,102 vs 1,769) and were 17% higher than those in February 2023 (1,801). 2024 could see an increase in companies restructuring their operations, pivoting their product or customer focus and/or consolidating with competitors – perhaps even calling time on their venture and returning remaining funds to investors.

Article by John Baker (john.x.baker@pwc.com) and David Kelly (david.j.kelly@pwc.com)


We have defined a ‘startup’ as a company in its first 7 years of incorporation.

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