After a decade of exuberance, Silicon Valley start-ups, venture capitalists and established tech companies alike are cutting investment and firing workers, prompting some in the tech world to openly predict a U.S. recession is on the way.
Facebook and Amazon have slowed their frantic hiring paces, while highflying newer companies including scooter company Bird and email client Superhuman have laid off workers. Tesla chief executive Elon Musk recently told employees he has a “super bad feeling” about the economy, and venture capital firm Lightspeed Venture Partners warned in a blog post that “the boom times of the last decade are unambiguously over.
The sudden shift is giving many in the sector whiplash. Uncertainty has settled over Silicon Valley as venture capitalists, tech founders and regular employees debate whether the pessimism is overblown or if tech really is the canary in the coal mine, already suggesting a broader downturn in the U.S. economy.Tech start-ups do serve as a “leading indicator” for the economy, said Till von Wachter, a professor of economics at UCLA.
Money has poured into smaller tech companies, too, as investors, including traditional venture capitalists all the way up to government-run sovereign wealth funds, have looked for ways to get in on the tech boom that never seemed to end.Tech has faced shaky moments in the recent past. At the beginning of the coronavirus pandemic, millions of Americans lost their jobs, and tech stocks, along with the rest of the market, fell quickly.
A fresh wave of economic uncertainty has washed over the world as Russia’s war against Ukraine grinds on, China’s economy wobbles because of fresh pandemic restrictions and the U.S. Federal Reserve raises interest rates to try to tame inflation. That uncertainty hit Silicon Valley early, with share prices beginning a steep decline in January.
“While the need for and access to micro-electric vehicle transportation has never been greater, macro economic trends impacting everyone have resulted in an acceleration of our path to profitability,” Chief Communications Officer Rebecca Hahn said in a statement.Global venture capital funding fell to $39 billion in May, its lowest level since November 2020, according to Crunchbase, which noted that later-stage rounds were more heavily hit than early-stage start-up funding.
The broader economic concerns are real, but cutting investment and spending across the board may create new issues, said Antoine Nivard, co-founder and general partner at Blank Ventures. Many start-ups sell software to other tech companies, making them especially vulnerable when the industry in general slows its pace of spending.“There’s also a self-fulfilling prophecy there. The first demand that evaporates is start-ups selling to each other,” Nivard said.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Vermont attorney general to resign, take job with Silicon Valley gaming companyVermont Attorney General T.J. Donovan announced Friday that he is resigning this month to take a position with the online gaming company Roblox.
Read more »
Free COVID-19 testing available in Ogden, Provo, Salt Lake City, Sandy, West Valley CityNomi Health is offering first-come, first-served mobile sites as coronavirus cases rise in Utah.
Read more »
Great Graduates: Sierra Christa, Medina Valley High SchoolSierra Christa was born and raised in Castroville and started her education at age three, and along with six other students she would share a classroom with them for many years to come.
Read more »
Phillies reinstate Zack Wheeler from the paternity list, send Scott Kingery to triple-A Lehigh ValleyWith Kingery heading back to triple A, Matt Vierling will be the primary backup infielder while Johan Camargo and Nick Maton continue to nurse injuries.
Read more »
Where to eat good food for less money in the San Fernando ValleyGas costs a bundle – dining at these classic restaurants won’t.
Read more »
Meet the Winemaker Showing That Willamette Valley Pinot Noir Ages With the Best of ThemAnd with a 17-vintage vertical available, Ribbon Ridge founder Harry Peterson-Nedry has done the work of aging it for you.
Read more »