Startup market is recovering
2023.01.03 01:38
Startup market is recovering
Budrigannews.com – Nic Szerman was laid off from Meta Platforms in November, just two months after he started working there full-time. The company saw a massive 13 percent layoff as the advertising market collapsed.
After a few days, he was back at work and sending pitches to Andreessen Horowitz’s cryptocurrency fund and the startup accelerator Y Combinator for his own company, Nulink, which makes payments using blockchain technology.
The 24-year-old stated, “As counterintuitive as it may sound, this layoff left me in a really good position.” Since I don’t need to repay the sign-on reward, I get four months of pay, and presently have the opportunity to zero in on my own task.”
Venture capitalists say that Szerman is part of a wave of would-be entrepreneurs who are rising from the ashes of Silicon Valley’s massive job losses in the second half of 2022.
Tech giants in the United States, such as Microsoft (NASDAQ:), Snap and Twitter (NYSE:) have eliminated more than 150,000 employees, according to Layoff.fyi, which monitors job losses in the technology sector.
Early-stage funding was robust, with $37.4 billion raised in so-called angel or seed rounds, in line with the record level seen in 2021, according to data from research firm PitchBook. However, overall venture capital (VC) financing fell 33% to approximately $483 billion in 2022.
With the tagline “Funded, not Fired,” Day One Ventures, a San Francisco-based early stage venture fund, launched a new initiative in November to support tech startup founders who had been laid off.
By the end of 2022, the program intends to distribute 20 checks totaling $100,000. Day One stated that it had received over 1,000 applications, the majority of which were from individuals who had been let go by Twitter, Stripe, and Meta.
Masha Bucher, co-founder of Day One Ventures, stated, “We’re investing $2 million in 20 companies – if we just find one unicorn it almost returns the fund, which I think is a really unique opportunity for us as fund managers.”
“Taking a look at the previous economic cycle, businesses like Dropbox, Airbnb, and Stripe (NASDAQ:) are the result of a crisis.”
Index Ventures, a multi-stage fund that has supported Facebook (NASDAQ:), Etsy is a NASDAQ: Skype’s second Origins fund, which will invest $300 million in early-stage startups, was also established.
In the meantime, Austrian VC firm Speedinvest and Silicon Valley investor U.S. Venture Partners have set aside a sum that is comparable for newly established businesses.
Gaming and artificial intelligence were cited as hot areas of interest by investors.
“Gaming has really transcended into mainstream culture with advances in game design, new innovations like cloud gaming, and the emergence of social networking in this sphere,” Sofia Dolfe, a partner at Index Ventures, stated.
“There is an opportunity to reset, reprioritize, and refocus energy and resources in every period of economic uncertainty.”
Szerman said that Y Combinator didn’t like his project, and he hasn’t heard from Andreessen Horowitz yet. However, he said that other early-stage venture capitalists had expressed interest.
He continued, “I told the investors we’ll talk in two or three months.” Now I’ll concentrate on scaling the system.
The downturn in 2022 has been compared by some investors to the dotcom crash of the early 2000s, when dozens of overpriced startups failed, filling the market with talent and launching a wave of new businesses like Facebook and YouTube.
According to Harry Nelis, managing partner at the investment firm Accel, “many great companies have been created in relatively dark times.” He sees a new generation of risk-takers emerge among the mass of unemployed individuals.
Former Big Tech employees, according to some industry players, are uniquely qualified to start their own businesses because they have witnessed firsthand the operations of some of the world’s largest companies and continue to have access to their network of highly skilled coworkers.
A former Google employee has sought to assist others in his situation, who are also looking for work after the tech giants. Christopher Fong started Xoogler in 2015, a project to assist former employees who want to start their own businesses after working for the tech giant for nearly a decade in California. The number of members in the group has since grown to more than 11,000.
Founders gained a “strong brand that can be leveraged to meet investors, potential customers, and recruit team members,” Fong.
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