SAN FRANCISCO — Is tech in for a rude awakening this year after a magic carpet ride the past few years?
The numbers, and recent actions by once high-flying start-ups, would seem to suggest so.
Consider: Mega-rounds, defined as funding of more than $100 million for venture capitalist-backed companies, are in free fall. The rate of start-ups attaining unicorn status are grinding to a crawl. Friday layoffs at tech start-ups, deemed Black Fridays, are increasing. Financial belt-tightening is the rule rather than the exception. Bellwether tech stocks such as Apple, Google, Facebook and Amazon have been taking it on the chin.
“It’s a time to recalibrate — so many companies can’t burn extraordinary amounts of money forever,” says Sunil Panel, co-founder of Sidecar, a pioneer in the crowded ride-sharing space that shuttered operations on Dec. 31.
Last year, Silicon Valley projected unbridled swagger. Today, “there is definitely an era of reckoning,” says Chris Sacca, a venture investor with stakes in Uber and Twitter. “Reality is setting in.”
A report from PricewaterhouseCoopers and National Venture Capital Association today underscores the chasm: While last year was the second-best in two decades for venture capital investments, at $58.8 billion, the fourth-quarter figures marked the smallest amount amount invested since Q3 2014 ($11.3 billion).
By Jon Swartz, USAToday, SouthFloridaReporter.com, Jan. 17, 2016
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