Startups spring from ashes of Big Tech purge

  • Mass layoffs in tech have spawned a new wave of startups
  • Early-stage venture capital funding at near-record levels
  • Echoes of the dotcom crash that powered Facebook and others

Jan 3 (Reuters) – Nic Szerman lost his job at Meta Platforms ( META.O ) in November, just two months after joining full-time, the victim of a significant 13% layoff as the advertising market shrank.

A few days later, he was back at work, seeking investment for his own company, Nulink, a blockchain-based payments company, and pitching startup proposals to accelerator Y Combinator and Andreessen Horowitz’s cryptocurrency fund.

“As counterintuitive as it may sound, this layoff has left me in a really good position,” the 24-year-old said. “Since I don’t have to pay the sign-up bonus, I get four months’ pay and now I have time to focus on my own project.”

According to venture capitalists, Szerman is part of a wave of potential entrepreneurs emerging from the ashes of Silicon Valley’s mass job losses in the second half of 2022.

U.S. tech giants including Meta, Microsoft ( MSFT.O ), Twitter and Snap ( SNAP.N ) laid off more than 150,000 workers, according to, which tracks tech job losses.

While total venture capital (VC) funding globally fell 33% to around $483 billion in 2022, early-stage funding was robust, with $37.4 billion raised in so-called angel or seed rounds, in line with a record level recorded in 2021. according to data from research company PitchBook.

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Day One Ventures, an early-stage venture fund in San Francisco, launched a new initiative in November to fund startups founded by people who have been laid off from their tech jobs, promoting the slogan “Funded, not Fired.”

The goal of the program is to cut 20 checks to $100,000 by the end of 2022. On the first day, he said he received more than 1,000 requests, most of them from people who had been interrupted by Meta, Stripe and Twitter.

“We’re investing $2 million in 20 companies — if we find just 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 of Day One Ventures.

“When we look at the last economic cycle, companies like Stripe, Airbnb, Dropbox were created in a crisis.”


Also in November, Index Ventures, a multi-stage fund that has funded Facebook, Etsy and Skype, launched its second fund, Origins, which will invest $300 million in startups.

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Meanwhile, Silicon Valley investor US Venture Partners and Austrian VC firm Speedinvest have earmarked a similar amount for start-ups.

Investors highlighted games and artificial intelligence as hot areas of interest.

“With advances in game design, new innovations like cloud gaming, and the emergence of social networking in this realm, gaming has truly transcended mainstream culture,” said Sofia Dolfe, Partner at Index Ventures.

“In every period of economic uncertainty there is an opportunity – to reset, re-prioritize and focus energy and resources.”


Szerman said his project was rejected by Y Combinator, while Andreessen Horowitz has yet to hear back, though he added that other early-stage venture capitalists have expressed interest.

“I told the investors that we will talk in two or three months,” he added. “Now I’m going to focus on scaling the system.

Some investors have compared the 2022 downturn to the dotcom crash of the early 2000s, when dozens of overvalued startups failed, flooding the market with talent and helping spawn a wave of new companies like Facebook and YouTube.

“A lot of great companies were born in relatively dark times,” said Harry Nelis, a partner at investment firm Accel, who sees a new generation of risk-takers emerging from the mass of unemployed.

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Some industry players say former Big Tech employees are uniquely positioned to start their own companies because they’ve seen firsthand how some of the world’s biggest firms operate and enjoy constant access to their network of highly skilled colleagues.

One ex-Googler tried to help others like him find a life after the tech giants. In 2015, Christopher Fong, who spent nearly a decade working for the tech titan in California, launched Xoogler, a project designed to help ex-employees hoping to start their own companies. Since then, the group’s membership has grown to more than 11,000.

Fong told Reuters that the Big Tech experience gave the founders “a strong brand that can be used to meet investors, potential customers and recruit team members.”

(This story has been revised to correct the designation of Harry Nelis to partner from managing partner in paragraph 19)

Reporting by Martin Coulter in London, Supantha Mukherjee in Stockholm and Krystal Hu in New York; Cut by Pravin Char

Our standards: Thomson Reuters Trust Principles.


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