[cs702]

Startup valuations had gotten too rich.

Now they're coming down to more reasonable levels, in fits and starts.

VCs and their LPs don't want the write-offs. They're painful.

But ultimately, I think the write-offs will prove healthy.

[dehrmann]

The takeaway from SVB is that there are a lot of losses in asset values either because of the pandemic (SF office space) or rising interest rates (home prices, startup valuations) that have yet to be realized.

[spaceman_2020]

I also think that tech is moving very fast, and startups with 10+ years of unprofitable existence without any potential exit are going to get disrupted by newer players.

The current crop of startups have largely been pioneers, but usually, the settlers take away the bulk of the spoils.

In India, Uber got everyone used to the idea of app based cabs. Now newer players are eating away Uber’s lunch with newer models and without having to spend any money on educating customers or drivers.

[dehrmann]

> startups with 10+ years of unprofitable existence without any potential exit are going to get disrupted by newer players.

It depends how unprofitable. Well-established products like Twitter and Reddit are big, have an established user base, and while not particularly profitable, I also don't see them getting disrupted by a rising competitor.

[snordgren]

They are social media sites, the textbook example of the network effect.

Them not being very profitable is almost like a moat in itself - not only is it hard to displace them, it's probably not profitable to do so either.

[KerrAvon]

Mastodon — which is a non-profit — is nibbling away at Twitter.

[gumby]

> Startup valuations had gotten too rich.

What possible value is there for entrepreneurs of a secular reduction in valuations?

Currently those of us in tech are suffering due to the absurdities of the SaaS obsession.

Edit: I mean developing technology, what has to be called “deep tech” these days.

[wcarss]

> What possible value is there for entrepreneurs of a secular reduction in valuations?

If the valuations were just speculative, then it could represent a return to a world where cause and effect and value are more rational, which is theoretically far better for a smart investor/entrepreneur to participate in than something between a game of craps and a ponzi scheme.

I don't mean to assert that any of that is reality, but that's a possible avenue for value to be found in a reduction of valuations.

[ryanSrich]

> VCs and their LPs don't want the write-offs. They're painful.

> But ultimately, I think the write-offs will prove healthy.

Yeah this was happening with or without the SVB collapse. In fact, I really don't see much of a correlation to any of this (between lower valuations and the SVB collapse). But I couldn't read the article as it's behind a paywall and the archive.is version got cut off.

Valuations from late 2020 to early 2022 were so radically insane for later stage startups that we will likely see a mass extinction event in another 12-18 months when they all either run out of money, or shrink by 90%+. Series A and B companies getting 100-200x on revenue is simply unimaginable for me even in the best of times. VCs that invested at these valuations are likely also going to die off as they'll be unlikely to raise future funds. Only time will tell.