Silicon Valley’s Unbridled Euphoria Runs Into Economic Reality

Between July and September, start-ups around the world raised $81 billion, a 53 percent drop from the same period a year ago, according to Crunchbase. It is the largest such decline since the site began tracking funding in 2007. More than 700 start-ups have laid off 93,000 workers this year, according to Layoffs.fyi, which tracks job cuts at start-ups. Over the past two weeks, weaker quarterly results at big tech companies, including Snap, Meta, Amazon and Microsoft, sent the broader tech industry spiraling further downward.

Techies are optimistic by nature. And some companies, including those focused on artificial intelligence and climate tech, have managed to whip up a modicum of hype. But at TechCrunch Disrupt, an enormous start-up conference in downtown San Francisco this month, speakers urged founders and tech workers to accept reality.

“The next few years are going to be a lot harder, and there will be less resources,” said Sheel Mohnot, an investor at Better Tomorrow Ventures.

“You can’t keep doing what you were doing last year and hoping for the same results,” said Vieje Piauwasdy, a director at the equity planning provider Secfi. “The market has changed. Everything has changed completely.”

Thejo Kote, the founder of Airbase, a provider of financial software, said many start-ups “are either moderately overvalued, very overvalued, or you’re in La-La Land and you haven’t realized that yet.”

On one panel, investors assured founders that it was OK to lower their ambitions from building a $100 billion company to, say, an $8 billion company.

“We’re going back to fundamentals now, which, I think, is good for everyone,” concluded Kara Nortman, an investor at Upfront Ventures.