Startups spring from ashes of Big Tech purge
Nic Szerman lost his job at Meta Platforms in November, just two months after joining full-time, falling victim to a sweeping 13% reduction of its workforce as the advertising market cratered.
Days later he was back working, seeking investment for his own company Nulink, a blockchain-based payment company, and sent pitches to startup accelerator Y Combinator and Andreessen Horowitz’s cryptocurrency fund.
“As counterintuitive as it may sound, this layoff left me in a really good position,” the 24-year-old said. “Because I don’t have to pay back the sign-on bonus, I get four months of pay, and now I have time to focus on my own project.”
Szerman is part of a wave of would-be entrepreneurs who are emerging from the ashes of the mass job losses seen in Silicon Valley in the second half of 2022, according to venture capitalists.
US tech giants including Meta, Microsoft, Twitter and Snap have purged more than 150,000 staff, according to Layoff.fyi, which tracks technology job losses.
While overall venture capital (VC) financing fell 33% globally to about $483 billion in 2022, early-stage funding was robust, with $37.4 billion raised in so-called angel or seed rounds, in line with the record level seen in 2021, according to data from research firm PitchBook.
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 programme aims to cut 20 checks for $100,000 by the end of 2022. Day One said it had received over 1,000 applications, most of them from people who were cut loose by Meta, Stripe and Twitter.
“We’re investing $2 million in 20 companies — if we just find one unicorn it almost returns the fund, which I think is a really unique opportunity for us as fund managers,” said Masha Bucher, co-founder at Day One Ventures.
“Looking at the last economic cycle, companies like Stripe, Airbnb, Dropbox have been created in crisis.”