The risk of startups failing is high, with some groups estimating the failure rate is well above 50 per cent, and could even be as high as 90 per cent.
In Australia, PwC’s startup economy report, commissioned by Google, estimated the tech failure rate is about 66%.
By the end of 2013 it is expected that 1,100 of the current 1,500 tech startups will ‘fail’ and 1,500 new tech startups need to be founded in 2014 (1,000 new tech startups were founded in 2012).
While the Startup Genome global report suggests almost 11 out of 12 startups will fail.
But one Australian investor says failing in Australia hurts more compared to tanking in the US.
Speaking at Vivid Ideas in Sydney on Thursday, 99designs founding investor Leni Mayo argued failing in Australia hurts more because the sector doesn’t have the big corporations, like Facebook, Twitter or Google to pick up the pieces.
“If I fail in Melbourne my landing is not necessarily so easy, and I actually think what that breeds in Australians is more commitment,” he said.
He said tackling the fear of failure and looking towards anything that appears to be an endless, bottomless pit takes courage.
“I think that there is a necessary part for many, many startups is looking into the abyss and confronting the fear of looking into the abyss,” Mayo said.
Being a small market, Mayo said overcoming the fear of failure in Australia “actually generates more commitment and more determination”.
“I think that’s a positive aspect of Aussie startup culture,” he said.