Has the tech bubble peaked? Signs that the startup boom may be fizzling

“We’re starting to get a lot of résumés from [software engineers at] companies where the business model isn’t working and they can’t get funding, so they are closing down or cutting back,” said Mark Dinan, a software recruiter based in the Bay Area, who keeps track of companies’ hirings and firings.

These startups are running out of money because VCs are being more discerning about where they place their money, making fewer, bigger bets.

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The mass failures after downturn are really an issue as banks are not getting their returns.

If they start fizzling out now, like SNAP fails, it is good for economy in the long run.

Wrong startups failure will affect less than big companies failures. For example, 10% revenue reduction in apple or google or amazon has wider impact than few startups closing the door.

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I’m sure the dismal post-IPO performance isn’t helping. Most of these companies are only releasing a tiny percent of shares at IPO. That means many i issuers have to wait to cash out. Meanwhile 2-3 years post-IPO the stocks are lower. I posted the list in another thread. It’s hard to find ones that are higher.

This is the issue:

Most of the IPOs are greedy to grab the money from investors or public, but not really making progress on their company side.

If the companies are really doing well, public money is sure to follow. Be it INVH or SNAP, they are not performing well as company.

Public responses are poor on them.

Is this the normal step prior to any bubble?

The euphoria of making quick bucks over the investment on a unicorn may be the first step, then, watch carefully for their transition from an idea to a concrete evidence that they can deliver the service for what they were created in the first place. But, if they can’t deliver? What’s next?

Most, if not for a few of them unicorns, they expect to be bought out by a big shark like Google or Facebook. If nobody then is picked, they will not be worth anything if they can’t survive by themselves.

Otherwise, the answer would be the famous “it’s the economy idiot!”.

I know few companies that are went public recently but are waiting for someone to acquire them. May be they just went IPO with 20% shares to set a valuation that is more acceptable to the suitors. If the market crashes I can clearly see consolidation due to falling valuations. Older companies with cash or equity will be the winners.

I think we are in a bubble. Fueled by easy money. But I also think that this time the money is real and there is no good way to suck it out of the market. This very well may be the new normal.


I guess not yet

Out of curiosity, which companies?

The bubble is Bitcoin… even it hasn’t burst yet…

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