Welcome to Startups Weekly, a fresh, human take on this week’s startup news and trends. To get it delivered to your inbox, subscribe here.
The Great Quit, the economic tendency for people to quit their jobs in search of other opportunities, was met with a harsh reality: the Great Reset.
This week, a slew of tech companies — mostly those valued at more than $1 billion by their venture capitalists — announced cuts to their workforces. I wrote three redundancy stories in less than 24 hours, a pace I hadn’t experienced since the pandemic began. These stories may have the same ledes, but they feel drastically different.
Unlike before, when startups had to lay off employees in response to the sudden shock of the pandemic, today’s tech companies are making cuts due – more or less – to their own lack of discipline. I have more empathy for a founder who was caught off guard by a pandemic than one who overspent when he knew the boom wouldn’t exist forever, and who is now cutting the same employees who cut them. helped to soar. Whiplash, I hear from some ex-employees now, is an understatement.
Growth is tricky, and part of a founder’s job is to navigate our way to scale, but we also have to remember that change was inevitable. Especially for startups coming to product market in a once-in-a-lifetime event.
The biggest difference between layoffs in 2020 and layoffs in 2022 is money, potentially a lifeline. Startups have raised massive capital through larger average deals over the past two years; meaning some of the capital that was once used to sweeten perks or candidate offers may be pivoting to the track. Jason Lemkin, Director of SaaStr, put it right on twitter: “Many startups have also been lucky and have years in the bank due to covid rounds…capital they otherwise wouldn’t have had.”
If you’re a founder, now is the time to unlearn some of those lavish spending and focus on conserving what you have. For employees, let me know which spreadsheets I should retweet. For more thoughts, read a roundup of all the tech layoffs from the past week, then head to TechCrunch+ for tips on how to navigate the market.
In the rest of the newsletter, we talk about spicy VC pivots, fintech dramas, and an inclusive gaming duo set in exclusive worlds. As always, you can support me by forwarding this newsletter to a friend or follow me on twitter or my blog.
What Venture Capital Firms Raise Despite Calculating
A number of venture capitalists have made the news this week, either announcing new funding or new strategies. In Afore’s case, it’s both. The pre-seed company tells TechCrunch that it closed a $150 million fund and introduced some sort of in-house accelerator with a standard deal. Going forward, any accepted business will receive $1 million at a post-money valuation of $10 million. It’s a not-so-subtle dig at Y Combinator and a way for Afore to stand out in a changing market.
Here’s why it’s important: Afore is not the only company to have changed its mind. Backstage Capital told me this week that after investing in 200 companies, it would now only do follow-up checks into its existing portfolio. For now, that means there are no net new businesses behind the scenes, even as the company increases its assets under management.
Additionally, we learn that Unusual Ventures’ new $485 million fund comes with an impressive promise of full-time help. Early stage founders, this is certainly a stressful time to be in your shoes – but also clearly a pivotal time.
Stripe Plays Checkers Throw Blanket
On Equity this week, your favorite trio discussed the Stripe and Plaid drama. For context, Stripe recently announced a new product that would give customers a way to directly connect to their customers’ bank accounts, access financial data, and manage transactions. AKA, exactly what Plaid does.
Here’s why it’s important: Plaid CEO and co-founder Zach Perret threw shade at Stripe in a tweet, suggesting the company may have used its previous relationship with Plaid to gain a competitive advantage. We’ve talked about overlapping and competing fintech for months on the podcast, but this sounded like the clearest example of a tension. Listen to the podcast for all of our take — and why this can be a useful data point for founders.
Let’s be exclusively inclusive
For the deal of the week that may have escaped your radar, I have two! Walnut and Line are two startups that bring inclusive games to exclusive industries. Walnut, which announced a $110 million Series A this week, built a buy-now, pay-later product for healthcare bills, and Line, which landed $25 million in majority debt financing. , wants to give low-income people an easier way to access emergency cash.
Here’s why it’s important: These startups, if successful, will underscore the promise of barrier-breaking technology for those who are disenfranchised from our institutions. That’s why I take fintech, with an angle on wealth, access and education, as my new beat.
All week long
Seen on TechCrunch
Digital health startups prepare for a post-Roe world
Your MVP is neither minimal nor viable nor a product
While the reversal Roe v. Wade looms, should you delete your period tracking app?
Peloton reportedly looking to sell up to 20% stake amid struggles
Seen on TechCrunch+
Get to the bottom of UiPath’s plummeting valuation
Psychedelic startups are on a long journey to consumer markets, but these 5 VCs are getting in the way
Hire top startup talent on a limited budget during the big quit
Until next time,