Nic Szerman was laid off from Meta Platforms (META.O) in November, just two months after starting full-time, as part of a 13% workforce reduction as the advertising market tanked.
Days later, he was back at work, pitching his own blockchain-based payment company, Nulink, to startup accelerator Y Combinator and Andreessen Horowitz’s cryptocurrency fund.
“As strange as it sounds, this layoff put me in a really good position,” the 24-year-old explained. “I get four months of pay because I don’t have to pay back the sign-on bonus, and now I have time to focus on my own project.”
According to venture capitalists, Szerman is part of a wave of would-be entrepreneurs emerging from the ashes of Silicon Valley’s mass job losses in the second half of 2022.
According to Layoff.fyi, a website that tracks technology job losses, US tech titans such as Meta, Microsoft (MSFT.O), Twitter, and Snap (SNAP.N) have laid off more than 150,000 employees.
While global venture capital (VC) financing fell 33% to around $483 billion in 2022, early-stage funding remained strong, with $37.4 billion raised in so-called angel or seed rounds, matching the record level seen in 2021, according to data from research firm PitchBook.
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3:34:30 PM on January 3, 2023 GMT+5:30 Updated 10 minutes ago
Startups emerge from the ashes of the Big Tech purge.
Supantha Mukherjee, Martin Coulter, and Krystal Hu contributed.
Meta Platforms Inc, Facebook’s parent company, has its headquarters in Mountain View.
[1/3] On November 9, 2022, a security guard stands guard outside the headquarters of Facebook parent company Meta Platforms Inc in Mountain View, California, U.S. Peter DaSilva/Reuters
Summary \sCompanies
Mass layoffs in technology spawn a new wave of startups
Early-stage venture capital funding is nearing record levels.
Others see echoes of the dotcom crash that fueled Facebook.
3 January (Reuters) – Nic Szerman was laid off from Meta Platforms (META.O) in November, just two months after starting full-time, as part of a 13% workforce reduction as the advertising market tanked.
Days later, he was back at work, pitching his own blockchain-based payment company, Nulink, to startup accelerator Y Combinator and Andreessen Horowitz’s cryptocurrency fund.
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“As strange as it sounds, this layoff put me in a really good position,” the 24-year-old explained. “I get four months of pay because I don’t have to pay back the sign-on bonus, and now I have time to focus on my own project.”
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According to venture capitalists, Szerman is part of a wave of would-be entrepreneurs emerging from the ashes of Silicon Valley’s mass job losses in the second half of 2022.
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According to Layoff.fyi, a website that tracks technology job losses, US tech titans such as Meta, Microsoft (MSFT.O), Twitter, and Snap (SNAP.N) have laid off more than 150,000 employees.
While global venture capital (VC) financing fell 33% to around $483 billion in 2022, early-stage funding remained strong, with $37.4 billion raised in so-called angel or seed rounds, matching the record level seen in 2021, according to data from research firm PitchBook.
Continue reading by scrolling.
Day One Ventures, an early stage venture fund in San Francisco, launched a new initiative in November to fund startups founded by people who had been laid off from their tech jobs, touting the slogan “Funded, not Fired”.
The program’s goal is to write 20 $100,000 checks by the end of 2022. Day One said it had received over 1,000 applications, the majority of which came from people let go by Meta, Stripe, and Twitter.
“We’re investing $2 million in 20 companies – if we find one unicorn, it almost returns the fund, which I think is a really unique opportunity for us as fund managers,” Day One Ventures co-founder Masha Bucher said.
“If you look at the last economic cycle, companies like Stripe, Airbnb, and Dropbox were born in times of crisis.”
Index Ventures, which has invested in Facebook, Etsy, and Skype, also launched its second Origins fund in November, which will invest $300 million in early-stage startups.
Meanwhile, Silicon Valley investor U.S. Venture Partners and Austrian VC firm Speedinvest have set aside a similar sum for newly founded companies.
Gaming and artificial intelligence were highlighted as hot areas of interest by investors.
“Gaming has truly transcended into mainstream culture with advances in game design, new innovations like cloud gaming, and the emergence of social networking in this sphere,” said Sofia Dolfe, partner at Index Ventures.
“There is opportunity in every period of economic uncertainty – to reset, re-prioritize, and re-focus energy and resources.”
2.0 DOTCOM BUBBLE
Szerman said Y Combinator rejected his project, and he hasn’t heard back from Andreessen Horowitz yet, though he added that other early-stage venture capitalists have expressed interest.
“I told the investors that we’d talk in two or three months,” he added. “I’ll concentrate on scaling the system right now.”
Some investors compared the 2022 downturn to the early 2000s dotcom crash, when dozens of overvalued startups failed, flooding the market with talent and sparking a wave of new companies such as Facebook and YouTube.
“Many great companies have been created in relatively dark times,” said Harry Nelis, managing partner at investment firm Accel, who believes that among the unemployed is a new generation of risk takers.
Some industry insiders believe that former Big Tech employees are uniquely positioned to launch their own businesses, having witnessed firsthand how some of the world’s largest corporations operate and having ongoing access to their network of highly skilled colleagues.
One former Googler has attempted to assist others who are looking for a life after working for technology behemoths. Christopher Fong, who spent nearly a decade working for the tech titan in California, launched Xoogler in 2015, a project designed to assist former employees who want to start their own businesses. Since then, the group’s membership has grown to over 11,000 people.
According to Fong, experience in a Big Tech firm provided the founders with a “strong brand” that can be used to meet investors, potential customers, and recruit team members.
