As layoffs spread across the tech industry, many displaced tech workers have decided to defy their unfortunate circumstances and take a leap into entrepreneurship by founding their own startups.
A study by Clarify Capital sheds light on the trajectories of 150 individuals who started their own companies after being laid off as technology workers, providing valuable insight into their motivations, challenges, and successes.
The survey found that almost half (48%) cited layoffs as the main reason for starting their own business, and the same number (45%) said they had already started a business before being laid off.
Layoffs may have had a positive impact on the economy
It's no secret that small businesses make a valuable contribution to local and national economies around the world, and the decline in employed technology workers is creating an influx of new startups. One in four post-layoff entrepreneurs has even turned down a job offer to pursue entrepreneurship.
The company, which specializes in providing customized financial solutions for businesses, revealed that family funding (37%) was the most common way to start. Many others relied on friends (25%) or unemployment benefits (15%), but few poured into savings (6%).
More than half (56%) started a business within six months of being laid off, and more than two in five (43%) reported securing customers within the first month.
More established traders are now reaping the benefits, with 45% paying their own salary and 52% of them reporting higher compensation than their previous job.
Meanwhile, entrepreneurs found cash flow, time management, and marketing difficult. It is clear that the lure of improved work-life balance and improved mental health is not enough to deter workers.
Although technology layoffs have slowed (51,000 so far this year compared to 162,000 in the same period in 2023, according to layoffs.fyi), thousands of workers continue to lose their jobs each month. entrepreneurship trends continue to be actively explored.
