Tech Layoffs Offer Hiring Boon for Startups That Survive
Thousands of layoffs across the tech sector may end up being a boon for startups that struggled to hire talent during the heady days of sky-high valuations. The big catch is they need to ensure their own survival first after venture-capital investors pulled back sharply this year.
The history of Silicon Valley is awash with stories of companies that were founded, or gained traction, in the ruins of recession. Amazon.com Inc. and Google, now known as Alphabet Inc., are among the big winners from past economic slumps. Google rose from the ashes of the dot-com bust of 2000 after it picked up a plethora of engineers laid off elsewhere, Margaret O'Mara, a professor of history at the University of Washington, told Bloomberg's Odd Lots podcast. They're now the world's fourth- and fifth-most valuable firms.
The caveat is that startups need to already have money from previous funding rounds because the major source of financing, venture capitalists, are being more cautious than ever.
Total funding dropped 34% in the third quarter from the previous period, and 55% from a year earlier, to $74.5 billion, according to market intelligence provider CB Insights. That's the lowest level in nine quarters. Funding from mega-rounds, where money invested in a startup is at least $100 million, fell to just a third of the level seen a year prior, the New York-based company found. A 42% drop in the value of new VC deals globally through the end of November puts that figure on track for the deepest plunge in two decades.
Rather than drive valuations ever higher — creating unicorns with a market value of more than $1 billion — investors are keeping their powder dry and focusing on the stakes they already have in young companies. That's
Read more on tech.hindustantimes.com
