It is becoming more apparent that American startups are facing a bad year, and financial relief is far from coming.
Higher interest rates, a shaky U.S. economy, and the recent banking crisis have led to a shortage of funds for capital-hungry startups in their early stages, along with less opportunity for those in late-stage development to cash out and exit.
Despite that investors remain optimistic due to rising stocks on Wall Street and positive corporate earnings reports in the second quarter, the news has not benefited aspiring new companies.
Startups across the country, particularly in Silicon Valley, which was hit hard by the collapse of key regional lenders, are expected to face lean times.
Established tech giants such as Apple, Amazon, Alphabet, and Microsoft are able to handle the recent losses in the tech industry, but many of their newer peers in the sector are struggling to survive.For decades, tech startups have a major factor in the growth of the U.S. economy, but many experts think that a massive wave of failures in Silicon Valley will soon hit the industry.
Tom Loverro, general partner at venture firm IVP, said in a May tweet that “the Mass Extinction Event for startups is underway. It is a news footnote most of the time. Don’t be fooled. The market has changed.”
