Six in ten UK start-ups disappear within five years

Britain makes starting easy—then leaves businesses to die

The UK is brilliant at creating businesses but much less successful at keeping them alive. Official figures show that only 38.4% of businesses born in 2019 survived for five years. Behind that statistic are thousands of promising founders struggling to find the modest sums they need to recruit, invest and grow.

OUR START‑UPS ARE RUNNING OUT OF ROAD

The Government wants the UK to be the easiest place in the world to start up a business. It already is.

No need to register anywhere apart from HMRC and if you stay below the thresholds (for example £90,000 for VAT and £50,000, currently, for Making Tax Digital) you can save yourself a lot of admin and make a living. It’s not starting up that’s the problem, it’s staying started that causes most angst.

Survival rates for businesses that start up in the UK are far behind Europe and the US. We’re a country full of entrepreneurs and entrepreneurial spirit with brilliant ideas and no fear of hard work, but while we make starting a business easy, funding one can be next to impossible.

The UK loves to celebrate entrepreneurs but it’s not so keen on funding them.

New research from Apollo (one of the world’s largest investment firms) shows the UK’s five‑year company survival rate is just 38%, far behind the EU average of 46% and miles off the US average of 51%. That gap isn’t about talent, ambition or innovation. It’s about capital and founders are paying the price.

The funding ladder

Ask any early‑stage founder what they need most and the answer is always the same: money. However, the UK’s funding landscape is a maze of micro‑grants too small to make a real difference, loans too hard to get agreement for, investors too focused on later‑stage deals, banks too risk‑averse and schemes too complex for ordinary people to navigate.

We’ve built a system where you can incorporate a company in ten minutes… but it can take ten months and much longer, to find the capital to keep it alive and make it productive, thriving and growing. Survival rates collapse long before year five. Of the 800,000 businesses started last year only around 300,000 will be alive and kicking by 2030.

Underfunded

The UK’s early‑stage business ecosystem is full of brilliant founders who never get the chance to scale. Founders of everything from cafés and shops can’t afford to grow to open a second outlet. Tradespeople and construction firms get stuck with one van when they could grow significantly with two. Tech start‑ups could solve all sorts of problems for customers if only they had the marketing budget to reach the right audience. Creative businesses can’t buy equipment, and care, health and staffing firms get blocked by cashflow gaps.

The US and Europe don’t have better entrepreneurs; they have better funding pipelines.

The missing middle

The UK has world‑class venture capital at the top end. It has micro‑grants at the bottom although not enough. It’s the £5k–£50k range which is the money that keeps a start‑up alive and that’s a money desert. That’s the capital that pays for the first employee, better equipment, insurance and digital tools.

Without it, founders burn out, stall, or shut down. Apollo’s survival‑rate data shows that our funding system that doesn’t match the reality of modern entrepreneurship.

Getting the right funding to the right people.

The UK’s early‑stage funding problem is down to four things:

Banks have tightened lending

Since the financial crash of 2008 and the change of rules on how much money lenders have to hold as a safety net, and post‑pandemic, risk models mean small businesses are treated like liabilities rather than opportunities.

Investors have moved upstream

Most Venture Capital now targets scale‑ups, not start‑ups.

Government schemes are too complex

Ordinary founders, especially disabled, minority and micro‑business owners, can’t navigate the bureaucracy.

Many entrepreneurs aren’t ready for funding

Money isn’t what many need for the point their business is at, but there’s a lack of support to get them ‘funding ready’ and explain the details of the different sorts of funding and how to get ready and pitch.

The result is that many great founders are left to bootstrap until they break.

A new funding model

If the UK wants survival rates to match Europe and the US, it needs a funding system built for real‑world founders, not unicorn fantasies.

That means simple grants (£5k–£25k) with light‑touch applications and micro‑loans with fair interest and fast decisions. Local investment funds run by councils and enterprise agencies would get money to the heart of the local micro business ecosystems and tax breaks targeted at early‑stage growth would give founders working capital. Businesses go under because of lack of cashflow management and with better support they could navigate staffing, equipment and compliance. We need a Funding Frontdoor so that founders have all the information they need about types of funding and know where and how to start

Survival

The UK needs capital rather than just more accelerators, pitch days and entrepreneurship campaigns. We have the ambition, talent and ideas. What we don’t have is the right sort of funding, at the right time for the stage of the business. Until we fix the early‑stage capital gap, survival rates will stay stuck at the bottom of the international league table and thousands of brilliant businesses will die before they ever get the chance to grow.