After the pandemic boom, Silicon Valley companies are going through a new, much less glorious era. After several years at sky-high valuations, Silicon Valley start-ups are in their worst crisis since the 2008 stock market crash, according to NBC News.
Tech company stocks plummet
The strong growth fueled by the pandemic and the explosion of online services has prompted many Silicon Valley companies to engage in IPOs. One startup in particular perfectly represents the situation faced by many others: Platoona start-up that has designed a home exercise bike, complete with a large screen for working out in any of the thousands of classes available with the Peloton All-Access membership.
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A perfect service in a period of confinement, it must be recognized. Yet the company’s situation is emblematic of this grim reality. In just a few months, its shares plummeted from from $163 at the end of 2020 to around $17 today. On May 5, the wall street journal reported that company executives were looking to sell a minority stake to an outside investor. In times of economic downturn, Silicon Valley technology companies are particularly vulnerable because most of them do not turn a profit.
In France, it’s the opposite: French Tech startups raised 5 billion euros in the first quarter of 2022. The amounts raised in France jumped by 259% in value compared to the first quarter of 2021. The average ticket is now 21.3 million euros. A very positive balance sheet, due in large part to some colossal fundraising.
Silicon Valley’s zombie unicorns
Even companies that had made headlines over the past 18 months by raising millions of dollars to reach unicorn status (valuation at a billion dollars), announced cascading layoffs. This is the case with Cameo, the Robinhood stock trading application, Thrasio, and even Workrise. Some people even talk about “zombie unicorns” to designate those startups that might need new investors to save them. Observers believe that it “A lot of it is about companies that never thought the venture capital train was going to slow down”.
In the United States, the economic environment is less secure, and the ground on which the technological landscape rested begins to resemble a “abyss” for many investors. Zach Coelius, an investor in several Silicon Valley companies, believes that the phenomenon of massive technology funding could be coming to an end. The situation is changing. According to him, the pressure began to mount at the start of the year, when interest rates began to rise and stock markets began to fall. The situation worsened with the announcement of the results for the first quarter of 2022.