{"id":9056,"date":"2022-05-14T07:12:38","date_gmt":"2022-05-13T23:12:38","guid":{"rendered":"https:\/\/dollarsandsense.sg\/business\/?p=9056"},"modified":"2022-05-14T07:13:36","modified_gmt":"2022-05-13T23:13:36","slug":"insights-what-is-happening-in-the-tech-industry-and-what-can-we-do-about-it","status":"publish","type":"post","link":"https:\/\/dollarsandsense.sg\/business\/insights-what-is-happening-in-the-tech-industry-and-what-can-we-do-about-it\/","title":{"rendered":"INSIGHTS: What Is Happening In The Tech Industry And What Can We Do About It?"},"content":{"rendered":"\n

This article was contributed to us by Jeraldine Phneah<\/a> and was first published on her LinkedIn page.<\/em><\/strong><\/p>\n\n\n\n

If you work in tech, it pays to stay on top of the trends so that you can respond accordingly.<\/em><\/p>\n\n\n\n

The technology industry boomed during the Covid-19 pandemic, extending a multi-decade bull run.<\/p>\n\n\n\n

Private companies received vast cash injections from investors. In 2021, tech startups raised $628 billion – double the previous year<\/a>. Giants like Apple and Tesla also enjoyed record-breaking market caps.<\/p>\n\n\n\n

Yet, 2022 has been off to a bumpy start<\/strong><\/p>\n\n\n\n

Global funding has fallen 19% to $144 billion in the first three months from the last quarter. This is the largest quarter-over-quarter percentage decline in nearly a decade.<\/p>\n\n\n\n

Apple, Microsoft, Google, Amazon, Meta and Netflix have collectively lost $1.3 trillion of market value<\/a> this year.<\/p>\n\n\n\n

Over the past few weeks, we\u2019ve also witnessed an alarming amount of layoffs.<\/strong><\/p>\n\n\n\n

Unicorns like Cameo<\/a> and Hopin<\/a> have laid off a significant percentage of their staff. We\u2019ve also seen the same with public companies like Robinhood and<\/a> Peloton<\/a>.<\/p>\n\n\n\n

Some others like Meta<\/a>, Uber<\/a> and DoorDash have frozen or slowed hiring for the rest of the year.<\/p>\n\n\n\n

Group CEO of Advanced Medtech Abel Ang describes this situation to be “the current capital market winter for startups\u201d<\/a><\/p>\n\n\n\n

I\u2019ve built a career in the software-as-a service industry for the past 7 years. Other aspects of my life are closely linked to the tech industry as well – the startups I work with; my investments in publicly listed tech companies and also the livelihood and careers of the people I care about.<\/em><\/p>\n\n\n\n

If you are as invested as I am in your personal and professional lives, it pays to understand what is happening so that you can too prepare for this winter.<\/p>\n\n\n\n

Why are all these happening?<\/strong><\/p>\n\n\n\n

Rising inflation, a stalled IPO market and instability sparked by Russia\u2019s war in Ukraine have caused investors in public and private markets to be more cautious.<\/p>\n\n\n\n

\u201cInvestor sentiment in Silicon Valley is the most negative since the dot-com crash,\u201d explains David Sacks<\/a>, Founder of Craft Ventures.<\/p>\n\n\n\n

The implications? It is harder and taking longer for companies to raise funds.<\/strong><\/p>\n\n\n\n

Deal sizes are getting smaller. Pitchbook has found that average VC pre-valuations in the late-stage dropped by 20 percent, from $731.6 million in 2021 to $572 million in the first quarter of 2022.<\/p>\n\n\n\n

Venture capitalists are also taking much longer to make decisions about new investments. The average closure time for a late-stage deal has moved to about six months<\/a>.<\/p>\n\n\n\n

\u201cWhile really good companies will still get money, it will be five times tougher to raise at a certain price…This is also why investors are telling their startups that \u2018unless you are okay with a down round, start conserving <\/a>cash<\/a>\u2019,\u201d explains Ashwin Damera, cofounder and chief executive of edtech firm Eruditus, which raised $650 million in August last year at $3.2 billion valuation.<\/p>\n\n\n\n

To cope with these new realities, startups are cutting down on spending, conserving cash<\/a> and pressured by investors to show a clear path to profitability.<\/p>\n\n\n\n