Startups rise from the ashes of the big tech purge

Startups rise from the ashes of the big tech purge

  • Mass layoffs in tech are spawning a new wave of startups
  • Record early-stage VC funding
  • Echoes of the dot-com crash that fueled Facebook and others

Jan 3 (Portal) – Nic Szerman lost his job at Meta Platforms (META.O) in November, just two months after starting full-time, and fell victim to a sweeping 13% downsizing as the advertising market plummeted.

Days later, he was back to work, seeking investment for his own company, Nulink, a blockchain-based payments company, and submitting pitches to startup accelerator Y Combinator and Andreessen Horowitz’s cryptocurrency fund.

“As counterintuitive as it may sound, this sacking put me in a really good position,” said the 24-year-old. “Because I don’t have to pay back the sign-on bonus, I get four months’ salary and now have time to concentrate on my own project.”

According to venture capitalists, Szerman is among a wave of would-be entrepreneurs emerging from the ashes of mass job cuts in Silicon Valley in the second half of 2022.

US tech giants like Meta, Microsoft (MSFT.O), Twitter and Snap (SNAP.N) have laid off more than 150,000 employees, according to, which tracks tech job losses.

While total venture capital (VC) funding worldwide fell 33% to approximately $483 billion in 2022, early-stage funding has been robust, with $37.4 billion raised in so-called angel or seed rounds, a record level from 2021 corresponded to data from the market research company 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 have been fired from their tech jobs, with the slogan “Funded, not.” Fired”.

The program aims to shorten 20 checks for $100,000 by the end of 2022. Day One said it received over 1,000 applications, most of them from people fired from Meta, Stripe and Twitter.

“We’re investing $2 million in 20 companies – if we find just one unicorn, it almost gives the fund back, which I think is a really unique opportunity for us as fund managers,” said Masha Bucher, co-founder of Day One Ventures .

“If you look at the last economic cycle, companies like Stripe, Airbnb, Dropbox were born in the crisis.”


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

Meanwhile, Silicon Valley investor US Venture Partners and Austrian VC firm Speedinvest have provided 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 rise of social networking in this space, gaming has really transitioned into mainstream culture,” said Sofia Dolfe, Partner at Index Ventures.

“In any period of economic uncertainty, there are opportunities to reset, prioritize and refocus energy and resources.”


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

“I’ve told investors we’ll talk in two or three months,” he added. “I will now focus on scaling the system.”

Some investors likened the 2022 downturn to the dot-com crash of the early 2000s, when dozens of overpriced startups went bust, flooding the market with talent and helping launch a wave of new businesses like Facebook and YouTube.

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

Some industry players say ex-Big Tech employees are in a unique position to start their own companies, having seen firsthand how some of the world’s largest companies work and enjoying ongoing access to their network of highly skilled peers.

A former Googler has tried to help others like him find a life following tech giants. In 2015, Christopher Fong, who worked for the tech titan in California for almost a decade, launched Xoogler, a project designed to help former employees start their own businesses. Since then, the group’s membership has grown to over 11,000.

Fong told Portal that experience in big tech companies has given founders a “strong brand that can be used to meet investors, potential customers and recruit team members.”

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

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