TLDR:
Key Points:
- Venture capital system is breaking down due to big startup losses
- Sources of venture capital are drying up
In an article at MarketWatch, Jeffrey Funk and Gary Smith highlighted the dangers to America’s startup system posed by big losses. They discussed the unprofitability of “unicorn” startups and the fact that almost 60% of America’s publicly traded unicorns have cumulative losses larger than their revenues. Sources of venture capital, such as endowments and pension funds, are also drying up, leading to limited partners reneging on their commitments.
The authors warned that the seriousness of the current downturn depends on how long the current AI bubble lasts. Winter always comes, just not when many expect it. The future of tech startups remains uncertain as the venture capital system experiences challenges.
