The Times reports that start-ups are increasingly leveraging AI while reducing their workforce to manage costs. The objective is to achieve a significant decline in insolvencies within the small business sector. According to PwCstart-ups accounted for 46% of company insolvencies in 2024, a decrease from 60% a decade ago. A start-up specialist at PwC UK, commented: “Many have embraced advanced technologies at speed. For example using GenAI, to drive efficiencies and offset rising costs.” Despite challenges such as rising interest rates and increased national insurance contributions, start-ups are demonstrating resilience. Many are quickly adapting to changing market conditions. They continue, however, to face hurdles, particularly a shortage of venture capital funding.

BFS Comment:

Undoubtedly AI will provide enormous benefits to many startups and SMEs in general as it develops. Interesting implication that use of AI may already be affecting the survival rate of startups. Despite this it’s a pity that we do seem to suffer still from lack of investment in the smaller UK businesses this despite schemes such as the EIS/SEIS. Could Government do more bearing in mind the recent reports of falling confidence among SMEs?

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