Hundreds of Chinese tech start-ups — including several unicorns — failed in 2019, with many more limping into the new year, as companies burned through cash in the face of growing financial headwinds, reported the Financial Times.
According to new data from business information provider ITjuzi, 336 start-ups in the country were forced to cease operations over the course of last year, having collectively raised RMB 17.4bn ($2.5 billion) from investors. Among them were companies valued individually at more than $1 billion.
Of the 20 costliest failures of “new economy” start-ups — those that have sprung up alongside the internet and private industry over the past two decades — about half occurred in 2019.
The closures come as tech companies in China face an advancing “capital winter,” a funding shortage that began last year as investors grappled with a slowing economy and the end of a venture capital boom. Meanwhile, tech start-ups’ penchant for employing expensive and risky strategies such as large subsidies intended to woo new customers has added to their problems.