Is 'Digital Poverty' Killing Off Promising Startups?

The key reason why many UK online start-ups fail lies in the lack of digital ability, a new report shows. According to an independent survey of UK entrepreneurs, the so-called “digital poverty” was the main reasons why businesses fail.

Other reasons include financing and raising capital.

The Unleashing Entrepreneurs Online Study, which questioned respondents involved in UK digital start-ups, found that despite the growing number of businesses forming and launching online, many are dooming themselves to failure as they do not have the necessary knowledge and ability internally to successfully manoeuvre around the digital landscape and take full advantage of online tools to improve their business.

The report stresses the importance of digital education and the need for entrepreneurs to have basic digital skills. Rakuten commissioned research house OnePoll in October 2015 to interview the owners of 300 online businesses asking them about the challenges they had faced when starting up their business and in its first year.

Among the other major findings were:

Negative perceptions around small businesses are considered to be the #1 barrier when trying to access funding

Two out of three small businesses are actively targeting new markets, but being held back by technical challenges including website adaptation adapting and setting up multiple payment options

Fifty per cent of respondents believe digital businesses are more susceptible to failure than physical businesses

Ninety per cent feel the government should do more to support online entrepreneurs

Sixty-five per cent would consider crowd-sourced funding for their business

Over a third of businesses see cloud hosting as the number one digital innovation to drive their online business, followed by social integration and mobile.