In the first three months of the year, venture funding in the United States fell 8% from a year earlier, to $71 billion. At least 55 tech companies have announced layoffs or shut down since the beginning of the year.
Instacart, one of the most highly valued startups of its generation, slashed its valuation to $24 billion in March from $40 billion last year. SAN FRANCISCO — Startup workers came into 2022 expecting another year of cash-gushing initial public offerings. Then the stock market tanked, Russia invaded Ukraine, inflation ballooned, and interest rates rose. Instead of going public, startups began cutting costs and laying off employees.
Last week, Cameo, a celebrity shoutout app; On Deck, a career-services company; and MainStreet, a financial technology startup, all shed at least 20% of their employees. Fast, a payments startup, and Halcyon Health, an online health care provider, abruptly shut down in the last month. And grocery delivery company Instacart, one of the most highly valued startups of its generation, slashed its valuation to $24 billion in March from $40 billion last year.
“Of all the times we said it feels like a bubble, I do think this time is a little different,” said Albert Wenger, an investor at Union Square Ventures. Entrepreneurs are experiencing whiplash. Knock, a home-loan startup with headquarters in New York City, expanded its operations from 14 cities to 75 in 2021. The company planned to go public via a special purpose acquisition company, or SPAC, valuing it at $2 billion. But as the stock market became rocky over the summer, Knock canceled those plans and entertained an offer to sell itself to a larger company, which it declined to disclose.
Matt Birnbaum, head of talent at venture capital firm Pear VC, said companies would have to carefully manage worker expectations around the value of their startup stock. He predicted a rude awakening for some.
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