Just two months after starting on a full-time basis, Nic Szerman quit his position at Meta Platforms (META.O) in November. He was a victim of the company’s drastic 13% personnel cut when the advertising market collapsed.
A few days later, he was back to work and looking for funding for his own blockchain-based payment company, Nulink.
He sent out proposals to entrepreneurial accelerator Y Combinator and cryptocurrency fund Andreessen Horowitz.
Despite what it may seem like, this layoff actually put him in a great situation, the 24-year-old remarked.
A person receives four months of compensation instead of having to pay off the sign-on bonus, freeing them up to work on their own initiative.
According to venture investors, Szerman is one of a number of aspiring business owners who are rising from the ruins of the massive employment losses that Silicon Valley saw in the second half of 2022.
More than 150,000 employees have been fired from U.S. Internet titans like Meta, Microsoft (MSFT.O), Twitter, and Snap (SNAP.N), according to Layoff.fyi, a website that records job losses in the industry.
Research firm PitchBook believed early-stage fundraising was strong in 2022, with $37.4 billion committed in the supposed angel or seed rounds, matching the record level observed in 2021, even as overall venture capital (VC) financing declined 33% globally to around $483 billion.
With the tagline “Funded, not Fired,” San Francisco’s Day One Ventures announced a new project in November to support businesses formed by people who have lost their employment in the technology industry.
By the end of 2022, the initiative hopes to have written 20 checks totalling $100,000. Day One reported receiving over 1,000 applications, the majority of which came from individuals who had been fired by Meta, Stripe, and Twitter.
The co-founder of Day One Ventures, Masha Bucher, described the chance as being extremely rare for fund managers: “If one can fund $2 million in 20 firms, and one unicorn can be located it virtually returns the capital.”
Companies such as Stripe, Dropbox, and Airbnb were born during a recession in the previous economic cycle.
The multi-stage investment firm Index Ventures, which has financed Facebook, Etsy, and Skype, established its second Origins fund in November. This fund will spend $300 million on early-stage firms.
In the meantime, VC firms Speedinvest in Austria and U.S. Venture Partners in Silicon Valley have set aside a comparable sum for newly established businesses.
Games and artificial intelligence were mentioned by investors as two hot topics.
Sofia Dolfe, a consultant at Index Ventures, claimed that because of improvements in game design, fresh inventions like cloud video games, and the rise of social connections in this industry, gaming has truly entered mainstream society.
Every time there is economic turbulence, there is a chance to start again, reset priorities, and refocus energy and resources.
While Andreessen Horowitz hasn’t spoken to him yet, Szerman said Y Combinator rejected his concept. He also mentioned that other initial venture capitalists had shown interest.
He said that the investors were told to talk in two or three months since scaling the system is currently the main priority.
Some investors likened the 2022 recession to the early 2000s dotcom disaster, when dozens of overpriced enterprises failed, flooding the industry with talent and inspiring a wave of new businesses like Facebook and YouTube.
Harry Nelis, a general partner at the investment firm Accel, sees a new breed of risk-takers emerging among the large number of individuals left unemployed.
Many great firms have been established in really gloomy circumstances, he said.
Industry insiders assert that former Big Tech employees are ideally situated to launch their own businesses since they have first-hand knowledge of how some of the largest corporations in the world operate and continue to have access to a global network of highly qualified co-workers.
