That the current economic uncertainties affect most disparate financial sectors it was predictable and the numbers only confirm it. Probably also due to a 2021 marked by speculative exuberance, Nasdaq shares have fallen by 25% from the beginning of the year to today. In the same time frame, some of Silicon Valley’s biggest giants have suffered cryptocurrency-worthy crashes: Meta lost 50%, Amazon 30%, Netflix an impressive 66%.
Speaking of cryptocurrencies: again from the beginning of the year to today, bitcoins have gone from 50 thousand dollars in value up to 19 thousand and also the market as a whole has dropped by over 60%. In addition to the difficulties macroeconomic (mainly related to the war in Ukraine), the experts also pointed out that what has happened in recent weeks has all the appearance of the inevitable bursting of a speculative bubble that had also involved the most traditional financial assets (even the old Dow Jones grew by 25% in the course of 2021).
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Startups have also been victims of all this, which in the last decade – reports the New York Times referring to the US ones – “had enjoyed a disproportionate growth in investments, fueled by an expanding economy, by low rates of interest and the fact that people are using more and more technology, from smartphones to apps, to artificial intelligence “.
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This disproportionate growth has taken place now abruptly interrupted: in the last quarter, investments in stars and stripes startups fell by 23% (worst figure since 2019), stopping at 62.3 billion. Worse still: in the first six months of the year, startup sales and stock market listings (which are the main tool with which investors are repaid) plummeted 88% compared to a year ago, stopping at 49 billion.
Similar numbers, albeit obviously smaller, are found on the European market: in the months of March and April, startups based in the European Union received funding of 7.5 billion: a very sharp decline compared to the 12.3 billion reported between January and February. “In particular, we are seeing a sharp retreat of the so-called ‘supergiant’ funding rounds: investments of $ 100 million and up,” writes the specialized site Crunchbase. “There were 31 destined for European Union startups in January and February and only 19 between March and April”.
Also in this case, a correction to the bubble seems to be added to the difficulties related to the war: in the course of 2021, loans to European startups (including those outside the UR) had reached 116 billion, a growth of as much as 159% over the year. Before. The situation on both sides of the ocean (including Latin America) has led the major venture capital companies, such as Sequoia Capital or Lightspeed Venture Partners, to warn younger companies, signaling that they are cutting costs, putting aside liquidity. and prepare for difficult times. With the inevitable result that startups froze hires and in some cases triggered layoffs.
At the moment, there seems to be a stalemate: many startup founders prefer not to raise funding because the value attributed to their companies is much lower than a few months ago; at the same time, investors have no plans to pay last year’s high prices. Not only that, according to what investor David Spreng always explained to the New York Times, between investors and startup founders there are opposite interpretations: the former do nothing but ring alarm bells, while the latter – from the top of the huge amount of money raised in past years – they are convinced that the storm will pass before it really puts them in crisis.
They may also be right, as long as the overall economic scenario does not deteriorate further.