However, this mass job loss has created a wave of would-be entrepreneurs in Silicon Valley, as many former employees seek investment for their startup projects. Early-stage funding remains strong despite a 33% global decrease in venture capital financing to around $483 billion in 2022. In so-called angel or seed rounds, $37.4 billion was raised, which is on par with the record level seen in 2021, according to data from PitchBook.
Day One Ventures' Initiative to Fund Laid-Off Tech Workers
In response to the layoffs in the tech industry, Day One Ventures, an early-stage venture fund in San Francisco, launched a new initiative in November to fund startups founded by people who had lost their tech jobs. The program aims to provide 20 checks for $100,000 by the end of 2022 and has received over 1,000 applications, mostly from individuals laid off by Meta, Stripe, and Twitter.
"We're investing $2 million in 20 companies – if we just find one unicorn, it almost returns the fund, which I think is a unique opportunity for us as fund managers,"
said Masha Bucher, co-founder at Day One Ventures.
Index Ventures' Second Origins Fund
Multi-stage fund Index Ventures, which has funded Facebook, Etsy, and Skype, launched its second Origins fund in November. The fund will invest $300 million in early-stage startups, focusing on gaming and artificial intelligence. Silicon Valley investor U.S. Venture Partners and Austrian VC firm Speedinvest have also set aside a similar amount for newly founded companies.
Opportunities in Times of Economic Uncertainty
Many investors see the current economic downturn as a time of opportunity, similar to the dotcom crash of the early 2000s when numerous overvalued startups failed, leading to a surge of new companies such as Facebook and YouTube.
"In every period of economic uncertainty, there is an opportunity – to reset, re-prioritize and re-focus energy and resources,"
said Sofia Dolfe, partner at Index Ventures. Former Big Tech employees, who have seen firsthand how major firms operate and who may have ongoing access to industry connections, are well-positioned to start their own companies.
