Over the past 10 years, the prevalence of money-burning startups with insane valuations has gone through the roof thanks to extraordinary amounts of VC funding. This trend peaked in 2021 when over 2 startups were achieving unicorn status on a daily basis. But, since then, VC funding has finally started to cool down resulting in money-burning startups facing a harsh reality check. Many startups are having to raise at lower valuations than their previous rounds for the first time. Some startups are even having to consider bankruptcy as they burn through the last remaining capital that they still have access to. In fact, in the first half of 2023, 338 US companies filed for bankruptcy out of which 54 were VC or private equity backed. Many of the startups that have survived the fall are considering getting acquired or merging to soften their annual losses. More established startups like Twilio are scrambling to become profitable but they’re finding out this a lot harder than it originally seemed. This video explains the rise and fall of VC funding and the crisis that money-burning startups are currently facing.
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Timestamps:
0:00 – No More Money
2:22 – Growth Investing
6:44 – Exceptions Make A Case
10:29 – Dotcom Bubble 2.0
Resources:
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Disclaimer:
This video is not a solicitation or personal financial advice. All investing involves risk. Please do your own research.
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