Startup mass extinction: E-scooter company Bird (fastest to reach $1B val) now worth $7M

At what point (if any) do those who issued these valuations start to have credibility issues?

Everyone wants to blow up the auditor when the financial statements are shown to be incorrect, who gets the blame for these bad valuations?

It was a unique situation of

1. Low interest rates
2. Already in a tech boom where apps become more and more popular
3. Covid created a need for tech services as people had to work from home and/or entertain themselves online

All of this has changed. Market was saturated. Now the companies who have little utility or demand for services will fold, while the few that were truly good ideas and properly managed will survive.

Reminds me of the startup that raised $500,000,000 to make a robot that would automate the pizza making process. That’s one expensive pizza oven.

They went belly up. Business Insider article

I listen to All In podcast and they talk about this as I also work in the tech space. Thankfully at a company with a more real product. But it's insane how fast all these companies blew up over the last few years and crashed down to Earth.

Basically all the companies got the last of their funding in early 2022 and have either been running out of cash or being marked down to their actual value with no chance to get cash flow positive. We just saw the acceleration and outcome of all that with the most startups ever shutting down.

Couple of points:

1. The 1980's with much higher interest rates was a very active decade for VC. Blaming this just on interest is lazy.

2. 90% of VC-backed startups fail. It's the top 1% that they make all their returns on. They have been trying for decades to raise the success percentage, but have barely budged it - see Techstars, Y Combinator, The Capital Factory, etc.

3. A lot of those VCs exited before the companies crashed with nice piles of cash.

4. Don't underestimate Go Woke, Go Broke. I can tell you without doubt from firsthand experience that it was a factor in Bird, Lime and several others. Funding female/minority founders who either weren't up to it or were straight up scammers (looking at you Theranos and WeWork), higher priority on social justice than profits (pretty much all of the bike/scooter rental deals), etc.

5. The SPAC craze created more money chasing deals than there should have been, which resulted in a lot of bad deals going public.

VC will be back, it's historically outperformed the market and is a pure numbers game - fund enough startups, and you get a unicorn or two. It also differentiates the US from every other country on the planet. No one has a VC culture like we do.

don’t forget the A&M/Jumbo/NIL recruiting startup.

up in smoke, right on schedule !