Venture capital will soon be brimming with ghosts • TechCrunch


Welcome to Startups Weekly, an in-depth look at startup news and trends this week by our chief correspondent and stock co-host. Natasha Mascarenas. To get this in your inbox, sign up here.

“There is more dry powder than ever.”

“There has never been a better time to start a startup.”

“Discipline is the new standard.” (Okay, okay, I made the latter, but didn’t you kind of believe it?).

The tech industry loves generalizations. And don’t worry, I’m enjoying my fair share too But as the economic downturn continues, it is increasingly important to consider the structural changes that may be taking shape in the venture capital landscape. Venture companies, unlike unicorn companies, often don’t have hundreds of employees to lay off. Instead, venture capitalists have cut costs in quieter ways.

in TechCrunch disabled Last week, General Catalyst Nico Bonatsos He said investment firms should go through cycles of natural selection and that it would be “survival of the fittest”.

“It’s a very painful activity for anyone who’s been through these things,” said Bonatos on stage with Coatou. Karen Maroney. He talked about how hundreds of new venture capital firms will decide to merge with one another to “build a more permanent franchise,” saying that some will leave the venture capital profession and others will lose senior partners to retire and have an idea of ​​what the future of their companies will look like.

Tracking the activity of people on the project land provides some examples. For example, Initialized Capital co-founder Gary Tan is leaving the company to join Y Combinator as president. Tan’s exit shook the company he helped found. He kept the castle after the company’s other co-founder, Alexis Ohanian of Reddit, stepped down in 2020.

Another team that has had its fair share of internal changes over the pandemic is Backstage Capital. The company cut the majority of its employees four months ago, affecting nine of the 12-person team. The layoff comes nearly three months after Backstage Capital narrowed its investment strategy to only participate in follow-up rounds of existing portfolios. This workforce reduction further underscores that the venture capital firm is struggling to grow, both externally due to its lack of dry powder and internally.

Maroney, a GP in Kwatiu, says companies “must earn the right” to survive. “There was the way I did some investments and make money. The investor said it was like, no, you have to earn right and not everyone will earn that right… and I think that is healthy.”

I’ll conclude with a phrase we’ve been dancing around with throughout the introduction, which is “Quit Quietly.” Bloomberg Investor Beta Roy E. Bahat Post a thread describing how seasoned venture capitalists can quietly transition to “easy mode,“A.k.a., he has become a less active and able player on the team. Perhaps their name helps the company close new funds with liquidity providers, and perhaps their calendar does not need to be occupied with a large number of introduction calls, just annual investor meetings.

If we combine a quiet take-off with cycles of natural selection and the difficulty of keeping track of how active a venture capitalist is, we experience a bewildering and fragmented landscape. Nobody has an incentive to say he’s not doing business as usual, creating a spectacle of extremism.

Sure, there are normal career cycles, but I imagine it’s becoming harder to keep track of who’s doing what and how often in a remote world where a partner in a venture capital firm has been diluted to mean too many things. Today, there are investors who are shadowed by the massive deal flow out there, and there are investors who themselves have become ghosts. Ha.

Just something to consider. In the rest of this newsletter, we’ll talk about Clubhouse, the latest layoffs for tech workers, and why a billion-dollar capital can’t provide AV technology.

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Clubhouse and bird app

One of my favorite interviews from TechCrunch Disrupt last week was with Clubhouse CEO and co-founder Paul Davison. We jumped to the TC+ stage to talk about the competition and of course What happens when the start of your company is determined by hype and celebrity.

Here’s why it’s important: Davison talked about his competition, specifically the Twitter Spaces, and how Clubhouse views his differentiation in the long run. As you will read in the piecehe’s optimistic about a more private version of social voice — a space he believes will only be won with an app committed solely to the medium rather than a commitment to a host of different services.

The tide is turning with the wave of layoffs from technology. kind of.

More than 780 companies have cut some of their employees this year, according to layoff tracking data. The workforce cuts affected at least 92,558 known people. The true number is likely to be higher given the reporting delays.

Here’s why it’s important: The same data source indicates that the tide is somewhat Shifting to the rhythm of technical layoffs. Nearly 70% of people laid off this year lost their jobs during May, June, July and August.

Since the summer of grief, the number of employees has decreased. September saw half the number of layoffs compared to August, and in October, new layoffs slowed while people were slightly affected by the increase from August. Read more On how the tide turned in my post for TechCrunch.

Argo AI says goodbye

Transportation editor and one of my favorites, Kirsten Korosick, broke the headline this week: Argo AI, powered by Ford and Volkswagen, It is closed. The autonomous car startup raised $1 billion after its launch in 2017.

Here’s why it’s important via Korosec: Marketing AV technology has always been a capital-intensive game, meaning the barrier to entry is more like a wall than speed bumps. Winds over the past couple of years have shifted toward driver assistance systems and the passenger vehicle investment that exists today.

  • By the way, subscribe to Korosec’s newsletter, station, Weekly bulletin for all means of transportation. It also works Twitter.

Image credits: Argo AI

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Same time, same webpage, next week?


Image credits: Bryce Durbin / TechCrunch

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