Are the good times over for tech companies? Not so fast.
Plunging tech stocks, crypto collapse, capital raising problems for some players
Negative news always overcome positive, but mainly the analysis behind the red-lines headlines.
We see the present market as an opportunity:
- Many start ups still raise cash (especially earlier-stage);
- Many companies have enough cash on BS for one year at least (and some for 4-5 years!);
- Many not so earlier-stage ones cancel their IPO plans (positive! public markets are not for ever-burning cash unprofitable businesses);
- Some expansion plans are on hold (may save investors’ money from unjustified CAC). This point finally has got the attention of the executives.
Its a vital point for many executives now — do their model really allow to make profit in the future? Maybe the answer is not necessarily positive, or companies are not so sure about it.
As a result, we see massive lay offs from all sorts of techs: big like Meta or Amazon, and small and young in many sectors: fintech, e-commerce, entertainment, collaborative tools, foodtech, logistictech, AI, edutech, SaaS (! sector with light-assets and economy of scale), robotics & IoT, etc.
To finalise, VCs now have a record amount of dry powder, approximately $300B, looking to be invested. This dry powder should continue to provide momentum in the VC space, even if there are significant corrections in the market.