A series of negative signals about the value of technology companies, the high costs of slowing growth in technology concerns and various additional signals from the more speculative regions of the technology market combine to form a drastically changed market.
It’s worth remembering how wild the past two years have been in startup land. In early 2020, as the pandemic hit a number of sectors, layoffs occurred in the startup industry. The cuts were so frequent that a tracker was built to keep an eye on the carnage. Then, as we all remember, investors realized that the tech industry would excel during a work-from-home period, and here at Marketingwithanoy, we traded the latest cuts in start-up staffing for tracking an accelerating IPO market.
How things have changed.
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For example, if you bought bitcoin a year ago, today you are at more than 30% losses. As we researched earlier this week, the NFT market is also slowing.
In less speculative areas, there are still signs of slowing down. Klarna’s 2021 figures indicate that the BNPL market, a huge startup focus around the world, will become an expensive growth proposition. So much so that we could see more combinations in the space as the number of BNPL players is greater than what the market could bear.
The IPO market is another downward signal, with the upcoming calendar of public market debuts looking essentially barren. Mobileye, yes, will go out, but that’s Intel running a formerly publicly traded company, so it hardly counts – although we’ll be watching.
EV companies that boomed after going public are seeing their values crash after failing to meet 2021 investment targets or 2022 projections.
And investors have decided that many of the world’s hottest tech companies — the GitLabs, HashiCorps and other former startups that sell to developers — are worth only a fraction of what they’d previously valued.
We are also seeing a return of the need to keep up with staff cuts at richly funded startups. Looking at recent headlines, we’ve seen layoffs at Hyperscience (missed growth targets, $100 million last round); WeDoctor (fired after IPO delays, final round $411 million); and OkCredit (business model refocus, $67 million final round). Indeed, tracker Layoffs.fyi notes that the pace of startup layoffs has been rising lately, in part due to Better.com’s successive budget cuts after the market collapsed beneath it.
The stakes don’t get lower. This week saw DocuSign lose its valuation after posting slower-than-expected growth guidance. So what, right? We have seen that often enough in recent months; we treated the problem to near death.