According to a new Clarify Capital (opens in a new tab) Nearly two-thirds (63%) of recently laid-off tech workers started their own businesses due to re-employment difficulties, according to a study, despite some reports late last year suggesting tech workers were in high demand.
The research involved 1,000 participating tech workers who had been made redundant during the pandemic and found nearly three-quarters (72%) of those who started a business did so within 12 months.
Although they often compete with their former companies, the benefits are many, including increased pay and security.
Start your own tech business
Surprisingly, difficulty getting hired ranks 11th as a reason laid-off workers start their own businesses, with career growth and greater opportunities playing a bigger role. Financially, the possibility of earning more and dissatisfaction with the previous salary rank second and ninth, respectively.
Although 91% said that their newly created company was in competition with their former employer, it turned out that 68% of them had acquired customers within eight months.
Although the numbers look promising, there are some challenges that come with being laid off and running a successful business. Choosing the right technology is the biggest concern, although the ongoing effects of the pandemic remain almost as pressing.
Similarly, for many, funding was a concern, with friends and family being a common source. Colleagues were often consulted, as were angel investors. Fewer startups have turned to crowdfunding platforms like Kickstarter and Indiegogo.
The Clarify Capital summarizes, “Pursuing an entrepreneurial lifestyle can seem quite fulfilling, but achieving success isn’t always easy… Nevertheless, many have been successful in their first year in business… [and] the majority also felt positive emotions when starting their new business.”