Amidst widespread layoffs in the tech industry, many displaced tech workers have decided to venture into entrepreneurship by launching their own startups, unphased by the disappointing circumstances.
A study by Clarify Capital sheds light on the journey of 150 individuals who started up their own companies after being laid off as tech workers, offering valuable insights on motivations, challenges, and successes.
According to the study, nearly half (48%) cite being laid off as the key reason they started their own businesses, with a similar number (45%) already having started businesses before they were laid off.
Layoffs might have been good for the economy
It’s a well-known fact that SMBs offer valuable contributions to local and national economies globally, and fewer employed tech workers have created an influx of new startups. As many as one in four post-layoff entrepreneurs even turned down job offers to pursue entrepreneurship.
The company, which specialized in offering tailored financial solutions to businesses, revealed that funding from family members (37%) was the most common way of getting started. Many others turned to friends (25%) and unemployment benefits (15%), with very few dipping into savings (6%).
More than half (56%) started their business within six months of being let go, 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 themselves a salary and 52% of those reporting higher compensation than their previous employment.
On the flip side, entrepreneurs found that cash flow, time management, and marketing had been challenging. Clearly, the allure of a better work-life balance and improved mental health are not enough to deter workers.
While tech layoffs have slowed down (51,000 YTD compared with 162,000 during the same period of 2023, via layoffs.fyi), thousands of workers continue to lose their jobs each month, and the entrepreneurship trend continues to be actively explored.
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