Winter comes late and hard to tech

It stayed warm longer than anyone would have predicted or dared hope this decade for tech. That warmth was grand and redolent with youth and vigor. The cold wind from layoffs, valuation slides, interest rates, conflicts, climate and egos run amok is now being felt. There are still many great emerging companies and projects. We are ceaselessly impressed by oodles of talent and some subjectively exciting new tools – like Diligence AI? at Systematic. There are tons of great folks being laid off at the top tech names whose shares have been hit hard and many times across the last year. In startup land, great talent and teams are being let go. This always means declining cost and increasing access to the ideas, execution, and the potential to dominate tomorrow and beyond. Underbid and on sale.

The Trillion Dollar Club of leading tech names seem to feel like they need to let go thousands and announce more layoffs - Alphabet is the exception here. Meta, Lyft, Stripe, Amazon, Salesforce, Zillow, Snap, Robinhood are cutting, many thousands and several north of 10+% of headcount. Twitter laid off more than 50% of its workforce. This is a very sad story, and we all hope trends and trajectory reverse soon. Crunchbase put together an impressive rollcall of the layoff misery here. Slowing funding, slowing consumers, changing tastes, privacy rules and attitudes have changed the valuation calculus and cut the risk appetites of allocators. Still there is so much dry powder in venture, so much talent and plenty of remaining growth. Venture is still young and frisky, admittedly a bit less so.

Our interest is not here – or ever – to add sadness or salt wounds. We are always focused on lessons learned and paths ahead. It seems that an era has ended and a new one is starting in the land of tech. The great IPOs of 10 years back seem a little less new and vital and maybe some of the VCs, personalities and “investing rules” of that era are starting to age more like fish and less like wine. So, what of the new? After all tech is all about buying a vision of the future and a team that just might be right, ready and get there a few minutes before the rest.

Tech is more mature and huge incumbents are no laughing matter. This has been true for years. The ad driven model is past its prime and real revenue and even positive cash flows are back in style. Venture debt and ARR funding will diversify the ways to get more scarce financing and SaaS may not assure double digit multiples. All this is fine, healthy, and overdue. The amount of opportunity remains immense, funded and undeniable.

Tools like ours and growing consensus suggest we might be poised for a more inclusive and representative tech when we burst out of the latest doldrums. We will. The spread of best techniques, data gathering, and analysis suggest future rounds of allocation will look broader and deeper and find more diverse targets – after all there is almost nowhere to go but up. We think global tech outgrows US tech, women and people of color get more allocation, impact comes to tech and solving social problems and being profitable retake the spotlight and the medal ceremonies to come. We couldn’t be more excited – let’s see if our tools can help.