TLDR:
- Startups and venture capital are currently in a recession similar to 2008.
- Many VC-backed startups have gone out of business, with a significant increase in closures in the first quarter of 2024.
The article discusses the current state of the venture capital and startup ecosystem, highlighting the silent recession that is taking place. While the media may not be focusing on this issue, data from Carta shows that between 50% and 70% of VC-backed startups went out of business last year, with a higher rate of closures in the first quarter of 2024. The recession is attributed to a rapid rise in interest rates, unexpected by many in the industry, leading to layoffs and shutdowns.
Despite the challenges, there is also an opportunity for innovation and growth. Investors are now prioritizing sustainable growth and profitability, which could lead to a more resilient and disciplined market. The industry is at a crossroads, with the potential for those who adapt to new norms to lead the next wave of entrepreneurial success. Companies born during recessions, such as Airbnb, Uber, Netflix, and Microsoft, have historically outperformed, indicating a potential for strength among startups founded in 2023 and 2024.
