VCs act wise as everyone in start-ups gets fired

“Sure, it was us who suggested your Total Addressable Market had tripled due to the global COVID-19 induced digital transformation wave and insisted you take on another $10 million, but what was your LTV:CAC ratio again?”

Sure, macroeconomic conditions change and the cost of capital underpins everything loss-making, high growth start-ups are valued on. It just feels a bit tough on founders like Teo, who now had to fire 44 people to fit a growth profile that, until two months ago, was likely the apple of her VC investor’s eye.

But while the idea that ‘good ideas will keep getting funded’ is a fixture of start-up chatter right now, it also sounds like a silent admission that venture capitalists have spent the last few years funding a whole swag of dubious ideas.

To grow as fast and as much as their stunning valuations required of them, too many start-ups have apparently ballooned out the balance sheet with expensive hires. Thank goodness we’ve decided it’s the cost of the people that’s the problem, and not the insane valuations and millions in venture capital that threatened to drown the fledgling business... See more

Suddenly, everyone in start-ups is getting fired. The tech industry has gone from $100 million capital raises by the bucketload to laying off slabs of staff.