Startup shutdowns are on the rise
Add Axios as your preferred source to
see more of our stories on Google.
Startups are shutting down at a rapid rate, as raising money from venture capitalists becomes more difficult.
Why it matters: Venture capitalists — under pressure from their own investors, due to a lack of IPOs and mergers — are becoming more selective about which companies they invest and reinvest in. Well, unless it claims to do generative AI.
By the numbers: The number of startup shutdowns increased by 58% between the first quarters of 2023 and 2024, according to data from Carta, which manages stock for startups.
- This came after a 124% jump between the first quarters of 2022 and 2023.
Zoom in: The data is for companies that closed their accounts on Carta for the stated reason of going out of business, and it may undercount because some companies leave the platform without saying why.
- Carta notes that "part of this recent increase in company shutdowns is due to a concurrent increase in the count of overall companies using Carta," but adds that the number of shutdowns as grown at a faster pace than has Carta's customer count.
Go deeper: Venture capital is full of distribution deadbeats
