Tech Startups In Peril As Venture Investors Withdraw Support

A wave of bankruptcies has taken over several high-profile tech startups, including WeWork, Olive AI, Convoy, and Veev, indicating a possible new pattern in the tech sector.

As reported by the New York Times, these closures and bankruptcies are the most recent instances in an emerging trend of tech startup collapses that investors predict is only just beginning.

Despite two years of efforts to reduce costs and avoid catastrophic failure, many once-promising tech companies are now dangerously close to depleting their resources. Investors are no longer swayed by mere potential. Instead, venture capital firms are discerning which nascent companies are worth preserving and urging others to either close or sell.

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This trend has resulted in considerable financial loss. For instance, Hopin sold its main business for a mere $15 million, despite having raised over $1.6 billion. Likewise, Zeus Living, a real estate startup that garnered $150 million, declared its closure just last month.

Investments in private U.S. startups saw an eightfold increase from 2012 to 2022, reaching $344 billion. However, many businesses that have been stagnating for years are now showing signs of failure. Given the substantial investments made over the past decade, investors are bracing for significant losses.

While some companies are choosing to shut down before they run out of money, returning whatever funds remain to their investors, others are in a “zombie” state, merely surviving but unable to expand.

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