- Mass tech layoffs spawn a new wave of startups
- Early-stage VC funding at nearly record levels
- Echoes of the dotcom crash that sparked Facebook and others
January 3 (Reuters) – Nic Szerman loses his job at Meta Platforms (META.O) In November, just two months after she started working full-time, she fell victim to a massive 13% reduction in her workforce as the ad market collapsed.
Days later, he was back in business, seeking investment for his own company Nulink, a blockchain-based payments firm, and sent pitches to startup accelerator Y Combinator and Andreessen Horowitz’s cryptocurrency fund.
“As illogical as it may sound, this layoff really put me in a good position,” said the 24-year-old. “Because I don’t have to pay back the entry bonus, I get four months’ salary and now I have time to focus on my own project.”
According to venture capitalists, Szerman is part of a wave of aspiring entrepreneurs rising from the ashes of collective job losses in Silicon Valley in the second half of 2022.
Meta, US tech giants including Microsoft (MSFT.O)Twitter and Snap (SNAP.N) liquidated more than 150,000 employees dismissal.fyitracking technological job losses.
Overall venture capital (VC) financing fell 33% globally to approximately $483 billion in 2022, while early-stage financing was solid with $37.4 billion raised in so-called angel or seed rounds, in line with the record high seen in 2021. to data from the research firm PitchBook.
Day One Ventures, an early-stage venture fund in San Francisco, new venture In November, to fund startups founded by people who were laid off from their tech jobs with the slogan “Not Fired, Funded”.
The program aims to cut 20 checks for $100,000 by the end of 2022. Day One said it received more than 1,000 submissions, most from people released by Meta, Stripe, and Twitter.
“We’re investing $2 million in 20 companies – if we find a single unicorn it almost brings back the fund, I think it’s a really unique opportunity for us as fund managers,” said Masha Bucher, co-founder of Day One Ventures.
“Looking at the last economic cycle, companies like Stripe, Airbnb, Dropbox were created in crisis.”
HOT: GAME AND AI
Also in November, Facebook launched the multi-tier Index Ventures fund, which funds Etsy and Skype. second Origins fundwill invest $300 million in early-stage startups.
Silicon Valley investor US Venture Partners and Austrian VC firm Speedinvest meanwhile allocated a similar amount for start-ups.
Investors highlighted gaming and artificial intelligence among their hot interests.
“Gaming has truly gone beyond mainstream culture with advances in game design, new innovations like cloud gaming, and the emergence of social networks in this space,” said Sofia Dolfe, partner at Index Ventures.
“In every era of economic uncertainty, there is an opportunity to reset, reprioritize and refocus energy and resources.”
DOTCOM BUBBLE 2.0
Szerman said his project was rejected by Y Combinator, but has yet to hear from Andreessen Horowitz, but has expressed interest from other early-stage venture capitalists.
I told the investors that we would meet in 2-3 months,” he said. “Now I will focus on scaling the system.”
Some investors have likened the 2022 downturn to the dotcom crash of the early 2000s, when dozens of overvalued startups went bankrupt and talent flooded the market, helping spark a wave of startups like Facebook and YouTube.
“A lot of big companies were founded in relatively dark times,” said Harry Nelis, partner at investment firm Accel, and sees a new generation of risk takers emerge among the people who are out of work.
Some industry players say ex-Big Tech employees are uniquely positioned to start their own companies, after seeing firsthand how some of the world’s largest companies operate and enjoying continued access to their networks of highly skilled colleagues.
A former Google employee tried to help others like himself who were looking for life after the tech giants. In 2015, Christopher Fong, who spent almost a decade working for the tech giant in California, Xoogler, a project designed to help ex-employees who hope to start their own company. Since then, the group’s membership has since grown to over 11,000.
Fong told Reuters that experience at Big Tech firms gave the founders “a strong brand that can be used to meet with investors, potential clients and recruit team members.”
News by Martin Coulter from London, Supantha Mukherjee from Stockholm and Krystal Hu from New York; Editing by Pravin Char
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