US tech startups run out of time & money

WE WORK RAISED MORE than $11 billion in funding as a private company. Olive AI, a healthcare startup, gathered $852 million. Convoy, a freight startup, raised $900 million.

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And Veev, a home construction startup, amassed $647 million. In the last six weeks, they all filed for bankruptcy or shut down. They are the most recent failures in a tech startup collapse that investors say is only beginning.

After staving off mass failure by cutting costs over the past two years, many once-promising tech companies are now on the verge of running out of time and money. They face a harsh reality: Investors are no longer interested in promises. Rather, venture capital firms are deciding which young companies are worth saving and urging others to shut down or sell.

It has fuelled an astonishing cash bonfire. In August, Hopin, a startup that raised more than $1.6 billion and was once valued at $7.6 billion, sold its main business for just $15 million.

Last month, Zeus Living, a real estate startup that raised $150 million, said it was shutting down. Plastiq, a financial technology startup that raised $226 million, went bankrupt in May.

In September, Bird, a scooter company that raised $776 million, was delisted from the New York Stock Exchange because of its low stock price. Its $7-million market capitalisation is less than the value of the $22-million Miami mansion that its founder, Travis VanderZanden, bought in 2021.

"As an industry we should all be braced to hear about a lot more failures," said Jenny Lefcourt, an investor at Freestyle Capital. "The more money people got before the party ended, the longer the hangover." Getting a full picture of the losses is difficult since private tech companies are not required to disclose when they go out of business or sell. The industry's gloom has also been masked by a boom in companies focused on artificial intelligence (AI), which has attracted hype and funding over the last year.