Startups stay strong but crypto reigns supreme
- ABS data shows more than 60% of SMEs cease operating within the first three years of their startup journey.
- As many as 9 out of every 10 startups are said to fail yet, investment in Australian startups rose to a record high in 2021.
- NFT startup OpenSea’s valuation is 10x what it was in July and is valued at US$13.3 billion.
Whether it’s in cloud computing, computer security, supply chain management, fashion, food, or anything else, the harsh reality is that as many as nine out of every 10 startups are said to fail, a Business Insider Australia report suggests.
Australian Bureau of Statistics (ABS) data shows that more than 60% of small businesses cease operating within the first three years of their startup journey, for a myriad of reasons, and not being profitable is likely the most common.
Yet the whole startup scene has never looked stronger as the pandemic pushes many to re-evaluate their jobs and lifestyle.
A list compiled by LinkedIn at the end of 2021 ranked the top startups for the year with Melbourne-based advisory and investment business Sayers topping the list, followed by online HR platform Employment Hero, and mattress and bedding company Koala taking third place.
However, cryptocurrency exchange Swyftx is a highlight and, like the digital assets it handles, experienced exponential growth with its headcount ballooning almost tenfold the last financial year.
There is consensus that it generally takes anything from 18 months to several years for a startup to be profitable.
Obviously, the more upfront capital a business requires to provide its products or services, and the higher its salaries, the longer it will take to generate a profit.
However, it seems that crypto and non-fungible tokens (NFT) are an exception to the rule.
Amid this strengthening space for small to medium-sized enterprises (SMEs), crypto-related businesses are reigning supreme as an increasing number of people adopt the blockchain-backed technology assets.
Online marketplace for buying and selling non-fungible tokens (NFTs) OpenSea has been touted the breakout tech startup of 2021.
Founded in 2017, the startup has been riding the wave of interest in blockchain technologies and earlier this month raised US$300 million in a Series C round, at a US$13.3 billion valuation.
When OpenSea last raised capital, in July last year, it added US$100 million to its coffers at just a US$1.5 billion valuation.
While few startups ever get to the level of OpenSea, the sector seems to be thriving.
In 2021, a new record was set for investment in startups from Australian and New Zealand with more than A$10 billion being distributed to local entrepreneurs.
During September alone, payments platform Airwallex raised A$275 million while graphic design platform Canva raised A$273 million as interest in Aussie startups hit new highs.
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