Welcome to Startups Weekly, this week’s spotlight on startup news and trends by Senior Reporter and co-host of Equity Natasha Maskerenhas To get this in your inbox, sign up here.
“There is more dry powder than ever.”
“There’s never been a better time to start.”
“Discipline is the new standard.” (Okay, okay, I made that last, but don’t you believe in kindness?)
The tech industry loves generalizations — and don’t worry, I enjoy my fair share, too — but as the recession continues, it’s important to think about structural changes in the venture capital landscape. Venture firms, unlike unicorns, usually don’t have hundreds of employees to spare. Instead, venture firms quietly cut costs.
General Catalyst at TechCrunch Disrupt last week Nico Bonatos Venture companies must go through natural selection cycles and “survival,” he said.
“It’s a very painful process for someone who’s been through that,” Bonatos said on stage with Coatue. Caryn Maroney. He talked about how hundreds of new VC firms are deciding to merge with each other “to build a more sustainable franchise,” some leaving the VC career and others losing senior partners to retirement and figuring out the future tp. Their companies look like.
Tracking the movement of workers in venture land provides a few examples. For example, Initialized Capital’s co-founder Gary Tan is leaving the firm to join Y Combinator as president. Tan’s exit is shaking up the organization he found. The company’s other co-founder, Reddit’s Alexis Ohanian, held the fort after he left in 2020.
Another group that has had its fair share of internal changes during the pandemic is Backstage Capital. The company laid off most employees four months ago, affecting nine of its 12-person team. The resignation comes nearly three months after Backstage Capital narrowed its investment strategy to only participate in successive rounds of existing portfolios. This manpower reduction shows that the venture capital firm is struggling to grow internally and with a shortage of dry powder externally.
Maroney, of Coatue GP, says organizations “need to get it right” to survive. “It was a way that they made some investments and made money. It’s like, no, you have to get the right thing and not everybody gets that right … and I think that’s healthy,” the investor said.
I’ll end with the word we’ve been dancing around the entire intro, which is “silence.” Bloomberg Beta Investor Roy E. Bhatt. He posted a thread about how seasoned capitalists can quietly go into “easy mode.”” Aka, being less active, less of a team player. Maybe their name helps the company close new funds with LPs, and maybe their calendars don’t need to be busy with many incoming calls, only annual investor meetings.
When we combine quiescence with cycles of natural selection and the difficulty of tracking how active a venture capitalist is, we have a confusing, fragmented landscape. No one is encouraged to say that it is not business as usual, and this creates an extreme landscape.
Of course, there are natural career cycles, but I think it’s getting harder and harder to keep track of who’s doing what and for how long, in a distant world where a partner at a VC firm has lots and lots of say. Today, there are investors who are ghosting because of cheap deals, and there are investors who are ghosting themselves. Ha.
Just remember one thing. For the rest of this newsletter, we’ll talk about the clubhouse, the latest tech cuts, and why $1 billion in capital won’t save AV technology.
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Clubhouse and Bird App
One of my favorite interviews From TechCrunch Disruption last week was Paul Davison, CEO and co-founder of Clubhouse. Let’s jump on the TC+ forum to talk about competition and of course what happens when your company is first exposed to advertising and celebrities.
Here’s why it’s important: Davison talks about how he sees the competition, Twitter Spaces, and Clubhouse as a differentiator in the long term. As you’ll read in the article, he’s obsessed with a more personalized version of social audio — a place he’ll only win with a media-only app, rather than a dedicated set of services.
The tide is turning on the technology wave. kind of.
More than 780 companies have cut a portion of their workforce this year, according to data tracker layoffs.fyi. The workforce cuts affected at least 92,558 known people. Due to reporting delays, the actual figure may be higher.
Here’s why it’s important: The same data source suggests that the tide is turning somewhat on tech cuts. Almost 70% of the people laid off this year lost their jobs in May, June, July and August.
Staff cuts have slowed since the summer of mourning. September had about half as many layoff events as August, and in October, new layoff events slowed and people had a slightly upward impact from August. Read more about how the tide is turning in my latest post for TechCrunch.
Argo AI says bye bye.
Transportation editor and one of my favorites, Kirsten Korosek, broke the headlines this week: Argo AI, backed by Ford and Volkswagen, is shutting down. The autonomous vehicle startup has raised $1 billion since launching in 2017.
Here’s why it’s important via Korosec: Commercializing AV tech has always been a capital-intensive game, meaning the barrier to entry is more like a wall than a speed bump. The wind has blown over the past two years to driver assistance systems and the monetization of passenger cars that exist today.
- By the way, subscribe to Korosek’s newsletter, the site, for a weekly delivery on all things transportation. She is on Twitter.
Image Credits: Argo AI
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Same time, same site, next week?
Image Credits: Bryce Durbin / TechCrunch
