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As the second-quarter venture capital data comes out, it’s clear there’s a difference in how the startup market behaves and how it actually feels. Sure, capital has slowed, but in the United States at least, the numbers aren’t as devastating as expected.
The numbers – which I would recommend you check out for yourself – give a healthy dose of perspective at a difficult time in tech. It’s an odd dissonance: no matter how much capital is out there, it’s clear that startups of all sectors and stages are still responding to macro concerns.
So this week’s dismissal column will be about contextualizing that dissonance: we have actual data, courtesy of Trueup, that gives us some color on who of the great tech is the toughest, both in terms of institutions and sectors hit was released.
Trueup, a tech recruitment platform that tracks layoffs, claims that since the beginning of 2022, over 117 unicorns have announced layoffs. Of this cohort, the sector with the most layoffs is fintech, followed by crypto and real estate.
Notable fintech layoffs in recent weeks include Amount, which shed 18% of its workforce after earning a $1 billion valuation just a year earlier, and MainStreet, which shed 30% of its workforce weeks ahead of a potential recapitalization , On Deck, which cut 25% and reduced its Accelerator program, and Klarna, which cut 10% of its workforce before seeking financing at a lower valuation.
Layoffs are not unheard of in the crypto world either, as Coinbase and Gemini have also laid off tech employees in response to the market.
As my colleague Mary Ann Azevedo reports, fintech’s recent decline stands in stark contrast to its busy 2021. It’s not entirely surprising that the same sector that has seen massive venture capital gains is also conducting layoffs. Growth at any cost, we hear from investors, comes at a cost — especially when there’s sudden pressure to shift to profitability and focus.
Understanding which sectors have the highest percentage of layoffs gives us a better perspective on where exactly the belts need to be tightened in a profitability-focused startup landscape. However, things are quickly becoming skewed: fintech and crypto could see more publicly known layoffs due to the high rate of innovation in recent years. Every startup these days is a fintech or web3 startup, so sheer volume could be why the drop is so dramatic.
So, that’s what I’m nucleating on these days. In the remainder of this newsletter we will look at a creative take on cap table management, the impact of The Roe Reversal on Tech and Cauldrons. As always, you can support me by forwarding this newsletter to a friend or by Follow me on Twitter or subscribe to my blog.
offer of the week
AngelList Venture launches Stack Equity Management, a way for startups to organize and manage their cap tables natively within the platform. Stack Equity is a suite of products that companies use to set up, update and acquire founder, employee and investor equity. It is available today for US-based C Corporations.
Therefore it is important: The company competes with its biggest competitor, Carta, when it comes to pricing for managing cap tables. Stack Equity Management calculates companies based on team members, while Carta calculates companies based on stakeholders, aka investors, on the cap table. We love fintech drama!
Cauldrons, Bolts, and Sauermarkets: Welcome to Halloween in July
We had a scary episode on Equity this week, as you can tell from the episode title. For me, by far the highlight of the episode was how a company came out of a lawsuit against a startup and settled by becoming a shareholder in the same company. whoops
Therefore it is important: Forever21’s parent company sued fintech Bolt, which has been experiencing ongoing struggles and executive shake-ups for failing to deliver on its promises. To date, the same company has come to terms with Bolt by becoming a shareholder in the startup. Talk about a quick turnaround. Here is an excerpt from Mary Ann’s article:
As for Bolt’s new cozy alliance with his formerly frustrated client, Kuruvilla now suggests it’s all water under the bridge.
He noted that “Both Forever21 and Lucky Brand have been using Bolt for a long time and will continue to use it with this renewed partnership.”
“Both the ABG leadership and I are working together to figure out how we can continue to grow it and this comes straight from their CEO because he has a very high bar for the type of partners he wants to work with,” added Kuruvilla. “He clearly has a strong belief in Bolt and our products. So we are excited to take it to the next level.”
About the week
Seen on TechCrunch
It sounds like Elon Musk is still trying to get out of his own Twitter deal
Sequoia wants to invest $1 million in your idea and then teach you how to actually sell it
Twitter begins testing “CoTweets” to allow users to co-tweet
Former Theranos manager Sunny Balwani is found guilty of fraud
MKBHD says yes to Google Glass, no to the Metaverse
Seen on TechCrunch+
The Roe reversal weighs heavily on burgeoning tech cities in red states
As the global venture capital market slows, is the US dodging the downturn?
Pitch Deck Teardown: Enduring Planet’s $2.1 million seed deck
7 ways investors can gain clarity when conducting technical due diligence
Crypto losses hit $670 million in the second quarter, up 52% from the year-ago period
Until next time,