7 ms·
Startups weather a dismal year – 543 have declared bankruptcy or shut down
- spandextwins 3y ago[dead]
- cedws 3y agoThere will be an even bigger graveyard of GPT wrapper companies soon.
- Version467 3y agoSure, but everyone knew they were doomed from the beginning, no? I imagine that many of the very thin wrapper products exist solely to make some profit while ChatGPT (and others) don’t offer that functionality out of the box, and not to evolve into a sustainable business over the next decade.
- margalabargala 3y agoYeah IMO a lot of these were less "companies", and more "quick one off projects to capitalize on an opportunity". Plenty of them are sub-5-person shops that will close having made a decent profit for all involved.
- gumballindie 3y agoOne can only hope. Freeing them to focus on something else is good for society and the economy.
- dopeboy 3y agoNot many that are venture backed though. Jasper and few others will suffer here.
- xenospn 3y agoCopyAI is (was?) one. No idea if they’re still in business.
- Dudester230602 3y agoAre there any start ups that are like charities founded to achieve something obviously monetizable and backed by multiple billionaires?
- bobsmooth 3y agoOpenAI?
- Dudester230602 3y agoYes, but pre-hype. Open AI will interview you like they did not interview their buddies who got in early. So I've heard.
- ushakov 3y ago"Declared bankruptcy" typically means a company couldn't make product somebody wants to pay for
- voisin 3y agoAnd oddly this wasn’t a barely a relevant issue for the last decade
- anonymouskimmer 3y agoNear zero interest rates make it pretty easy to have a greater than T-bill return on investment.
- dahart 3y agoIt does not mean the company couldn’t make a desirable product, nor that nobody paid for it, it means the company didn’t make the product profitable in time, before the cash ran out. There are lots of reasons this can happen to good products that people do want to pay for, in addition to reasons like lack of market fit, building products people don’t want, building bad products, and failing to build a product at all.
- troupo 3y agoAh, you mean nearly every single YCombinator graduate (you'd be hard pressed to find even a handful of profitable startups there)
- tcgv 3y agoOff topic: It's really annoying and distracting when they put these "related videos" that automatically start playing while I'm reading an article. Really bad UX.
- baron816 3y agoI wonder how many were crypto startups
- dopeboy 3y agoA very high proportion of them, but really, every founder is struggling right now.
- tlogan 3y agoNot just startups are affected. I have feeling that economy (or maybe just spending?) has contracted by approximately 10%, coupled with an additional 10% inflation rate. So a typical small business in the technology sector might experience a reduction in revenue of about 10%, while simultaneously facing a 10% increase in operating costs.
- anonymouskimmer 3y agoWhich economy are you feeling this about, and what is your feeling based on? Is this just the "technology sector" economy that you're feeling this about? Because the linked article is about the broader startup economy (though seems to be mainly about VC-funded startups?). And a 10% contraction would dramatically hit employment (companies, on average, don't have access to that much money to pay employees if revenue decreases 10%).
- gruez 3y agoA 10% drop is huge. Even in the GFC the peak to trough drop for GDP and personal expenditures were only 4.82% and 2.58% respectively. https://fred.stlouisfed.org/series/PCEC96 https://fred.stlouisfed.org/series/PCEC96 https://fred.stlouisfed.org/series/A939RX0Q048SBEA https://fred.stlouisfed.org/series/A939RX0Q048SBEA
- tlogan 3y agoI just have a feeling - there were so many companies reporting that. FedEx revenue dropped 10%. Dell revenue dropped 10%. Union Pacific revenue dropped 10%. Foot Locker revenue dropped 10%. Cisco sales are 10% down. Maybe because I was following these companies …
- anonymouskimmer 3y agoFedEx & UPS: Amazon delivery is up, which means they use FedEx and UPS less. I noticed on the Macrotrends report for Union Pacific that the decrease is only in the last two quarter's results, and follows back to back yearly increases of 11.63% and 14.08%. The longer chart shows UP is subject to cyclical ups and downs since at least 2012. https://www.macrotrends.net/stocks/charts/UNP/union-pacific/revenue https://www.macrotrends.net/stocks/charts/UNP/union-pacific/... For Cisco I noticed you switched from revenue to sales. The most recent quarter's revenue results show an 8% year-over-year increase. https://newsroom.cisco.com/c/r/newsroom/en/us/a/y2023/m11/cisco-reports-first-quarter-earnings.html https://newsroom.cisco.com/c/r/newsroom/en/us/a/y2023/m11/ci...
- kaashif 3y agoThe article doesn't say whether this is higher or lower than usual when compared to the total startup population. Saying "this is the highest number ever reported" is like when presidents brag about receiving the most votes in history - the population is just bigger!
- Terr_ 3y agoExactly, although I think some journalists are complicit because they like being able to write impressive sounding headlines. Another example is anytime more money is spent/received on/for something that ever before, and the effect of inflation is being ignored.
- pasquinelli 3y agoif the number of start-ups shot up before crashing, that's also bad, isn't it? like when a company grows a lot and then lays off a large fraction of its workers, it indicates something has fallen through, doesn't it?
- 62951413 3y agoYou can glean more from VC blogs. For example, https://www.saastr.com/carta-startup-shutdowns-are-up-237/ https://www.saastr.com/carta-startup-shutdowns-are-up-237/
- ilamont 3y agoI caught up with a friend recently who has been involved with startups for years as a founder or engineer. His current position is senior engineer at a blockchain startup, funded a few years ago when VC money was flowing and “blockchain” was hot. “Honestly, I don’t even know what we’re building or who will use it,” he admitted. People love to talk about the successes and use that to justify the VC startup model, but I suspect many if not most are like this - a pretend company based on a buzzword with no real customers or viable business model.
- dopeboy 3y agoWeb3/crypto is especially hard right now, because the market shrank overnight. A lot of 'solutions in search of a problem' going on in that world.
- realusername 3y agoThe issue is that there's never been any adoption of this technology, the cryptocurrency market is just a casino at this point.
- dopeboy 3y agoWhich to be clear, is a viable economic market. It's just that the uptake is painfully slow.
- realusername 3y agoOh yeah it's also a valid market, it's just not worth of the current valuation though.
- redhale 3y ago> A lot of 'solutions in search of a problem' going on in that world. Same as it ever was.
- 1vuio0pswjnm7 3y agoA lot of wasted capital that could have gone toward real problems. A gross misallocation.
- troupo 3y agoIt's only "dismal" because the unlimited free money has run out. Silicon Valley "innovation" is "run for years losing millions or even billions of dollars every year without as much as a plan to become profitable". Maybe now companies will start creating actual sustainable businesses?
- erikerikson 3y agoLooks like the always discrete money supply is only very slightly down[0]. [0] https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
- dopeboy 3y agoSad to say my startup is part of this grim statistic. We raised capital in October of 2021 and were unable to raise follow on capital. I laid off all staff and we shut down two months ago. Founders today are conserving cash. Gone are the days of raise money, build a big team, and grow grow grow. Now it's all about doing more with less, with slow and steady growth.
- throwaway2847 3y agoWhat was the conversation like with VCs when they turned you down for additional capital?
- dopeboy 3y agoThey'll still take meetings - it's free information so they'll never turn that down. Even if they're a solid 'no' from the outset. VCs aren't always transparent with their reasoning. Some of them said they don't believe in our category anymore. Some of them said "great work, show more growth". It's always difficult to parse the signal here. It sucks, but you can't be too hard on yourself. Many of these investors haven't deployed capital in months.
- stevenjgarner 3y agoAm I missing something, there appears to be no context to this article? When it says "543 startups shut their doors", that is 543 of which population of startups? Are they just referring to companies with SEC filings? There have been millions of companies started in the US this year, given "the US Census Bureau shows that 5,044,748 new businesses were started in 2022" [1] [1] https://www.commerceinstitute.com/new-businesses-started-every-year/ https://www.commerceinstitute.com/new-businesses-started-eve...
- AlecSchueler 3y agoMy question was how much of an aberration this was from a "normal" year?
- dahart 3y agoThe article doesn’t say what normal is, but does say “The third fiscal quarter saw 212 shutdowns, the highest number since the firm began tracking the data. Last year, 467 companies folded.” Largest quarterly number and ‘higher than last year’ of course don’t directly compare to normal. They also aren’t a percentage, so this doesn’t help us understand if the failure rate is higher, or there are just more startups. The firm in question is Carta. Browsing through their set of blog posts and data, the headlines don’t seem to project a dismal picture at all, somewhat the opposite. https://carta.com/blog/category/data-research/ https://carta.com/blog/category/data-research/
- ivanjermakov 3y agoNon-normalized data insights are useless, blatant journalism at its finest.
- Log_out_ 3y agoI wonder how many in percent are actually in lung fish survival mode, just trying to get by with a different buisness until the market returns.