# Startups spring from ashes of Big Tech purge
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-01-03
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Tech Job Losses Spark Entrepreneurial Wave in Silicon Valley
Meta Description: Discover how job cuts at tech giants like Meta led to a surge in startups as laid-off employees turn to entrepreneurship. Learn more here.
URL: https://financedigest.com/startups-spring-from-ashes-of-big-tech-purgehtml

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By Supantha Mukherjee, Martin Coulter and Krystal Hu

(Reuters) – Nic Szerman lost his job at Meta Platforms in November, just two months after joining full-time, falling victim to a sweeping 13% reduction of its workforce as the advertising market cratered.

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

“As counterintuitive as it may sound, this layoff left me in a really good position,” the 24-year-old said. Because I don’t have to pay back the sign-on bonus, I get four months of pay, and now I have [time to focus](https://www.financedigest.com/why-manufacturers-mustnt-lose-their-green-focus-in-troubled-times.html "WHY MANUFACTURERS MUSTN’T LOSE THEIR GREEN FOCUS IN TROUBLED TIMES") on my own project.

Szerman is part of a wave of would-be entrepreneurs who are emerging from the ashes of the mass [job losses seen](https://www.financedigest.com/icrc-to-cut-some-1500-jobs-as-humanitarian-budgets-seen-sliding.html "ICRC to cut some 1,500 jobs as humanitarian budgets seen sliding") in Silicon Valley in the second half of 2022, according to venture capitalists.

U.S. tech giants including Meta, Microsoft, Twitter and Snap have purged more than 150,000 staff, according to Layoff.fyi, which tracks [technology job losses](https://www.financedigest.com/new-ca-technologies-payment-security-solution-reduces-online-fraud-loss-by-25-percent.html "New CA Technologies Payment Security Solution Reduces Online Fraud Loss by 25 Percent").

While overall venture capital (VC) financing fell 33% globally to about $483 billion in 2022, early-stage funding was robust, with $37.4 billion raised in so-called angel or seed rounds, in line with the record level seen in 2021, according to [data from research firm](https://www.financedigest.com/dollar-firms-after-u-s-labor-data-suggests-more-rate-hikes.html "Dollar firms after U.S. labor data suggests more rate hikes") PitchBook.

Day One Ventures, an early stage venture [fund in San Francisco, launched a new initiative in November to fund startups](https://www.financedigest.com/british-ev-startup-arrival-gets-300-million-funding-aims-to-slow-cash-burn.html "British EV startup Arrival gets 0 million funding, aims to slow cash-burn") founded by people who had been laid off from their tech jobs, touting the slogan “Funded, not Fired.

The program aims to [cut 20 checks for $100,000 by the end](https://www.financedigest.com/hp-to-cut-about-12-jobs-by-end-of-fiscal-2025.html "HP to cut about 12% jobs by end of fiscal 2025") of 2022. Day One said it had received over 1,000 applications, most of them from people who were [cut loose by Meta](https://www.financedigest.com/meta-to-cut-10000-jobs-in-second-round-of-layoffs.html "Meta to cut 10,000 jobs in second round of layoffs"), 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 [really unique opportunity for us as fund managers,”](https://www.financedigest.com/with-the-right-active-manager-you-really-do-get-what-you-pay-for.html "With the Right Active Manager, You Really Do Get What You Pay For") said Masha Bucher, co-founder at Day One Ventures.

Looking at the last economic cycle, companies like Stripe, Airbnb, Dropbox have been [created in crisis.”](https://www.financedigest.com/why-entrepreneurs-can-transform-the-crisis-into-business-opportunities-to-create-more-impactful-and-long-lasting-ventures.html "Why entrepreneurs can transform the crisis into business opportunities to create more impactful and long-lasting ventures")

HOT: GAMING AND AI

Also in November, multi-stage fund Index Ventures, which has bankrolled Facebook, Etsy and Skype, launched its second Origins fund, which will [invest $300 million in early-stage startups](https://www.financedigest.com/analysis-rocket-startups-face-adapt-or-die-moment-amid-investment-drought.html "Analysis-Rocket startups face adapt-or-die moment amid investment drought").

[Silicon Valley](https://www.financedigest.com/hsbc-acquires-british-arm-of-stricken-silicon-valley-bank.html "HSBC acquires British arm of stricken Silicon Valley Bank") investor U.S. Venture [Partners and Austrian VC firm](https://www.financedigest.com/exclusive-crypto-giant-binance-moved-400-million-from-u-s-partner-to-firm-managed-by-ceo-zhao.html "Exclusive-Crypto giant Binance moved 0 million from U.S. partner to firm managed by CEO Zhao") Speedinvest have meanwhile earmarked a similar amount for newly founded companies.

Investors highlighted gaming and [artificial intelligence](https://www.financedigest.com/types-of-artificial-intelligence.html "Types of artificial intelligence") among hot areas of interest.

With advances in game design, new innovations like cloud gaming, and the [emergence of social networking](https://www.financedigest.com/emergency-call-services-telcos-urge-eu-to-protect-telecoms-networks-from-power-cuts.html "Emergency call services, telcos urge EU to protect telecoms networks from power cuts") in this sphere, gaming has really transcended into mainstream culture,” said Sofia Dolfe, partner at Index Ventures.

In every period of [economic uncertainty](https://www.financedigest.com/combatting-economic-uncertainty-in-2023-with-the-payments-sector-2.html "Combatting economic uncertainty in 2023 with the payments sector"), there is opportunity – to reset, re-prioritize and re-focus energy and resources.

DOTCOM BUBBLE 2.0

Szerman said his project was rejected by Y Combinator, while he hasn’t heard back from Andreessen Horowitz yet, though he added that other early-stage venture capitalists had expressed interest.

I told the [investors we’ll chat in two or three months,”](https://www.financedigest.com/6-months-to-go-until-brexit-and-investor-sentiment-remains-bold.html "6 months to go until Brexit and investor sentiment remains bold") he added. “I’ll focus on scaling the system now.”

Some [investors compared the 2022 downturn to the dotcom crash](https://www.financedigest.com/stocks-with-greater-socially-responsible-investor-demand-saw-weaker-losses-during-the-covid-19-crash.html "Stocks with greater socially responsible investor demand saw weaker losses during the COVID-19 crash") of the early 2000s, when dozens of overvalued startups went bust, flooding the market with talent and helping to spark a wave of new companies such as Facebook and YouTube.

Many great companies have been created in relatively dark times,” said Harry Nelis, partner at investment firm Accel, who [sees a new generation of risk](https://www.financedigest.com/wto-sees-subpar-2023-trade-growth-with-multiple-risks.html "WTO sees “subpar” 2023 trade growth with multiple risks") takers emerge among the swathe of people left unemployed.

Some industry players say former Big Tech employees are uniquely placed to start their own companies, having seen first-hand how some of the [biggest firms](https://www.financedigest.com/uk-firms-plan-biggest-pay-rises-since-2012-to-fill-staff-gaps.html "UK firms plan biggest pay rises since 2012 to fill staff gaps") in the world operate, and enjoying ongoing access to their network of highly skilled colleagues.

One former Googler has sought to help others like him looking for life after technology giants. In 2015, Christopher Fong, who spent almost a decade working for the tech titan in California, launched Xoogler, a project [designed to help former employees hoping to start their own companies](https://www.financedigest.com/mastering-the-2016-company-logo-design-trend.html "Mastering The 2016 Company Logo Design Trend"). Since then, the group’s membership has since swelled to more than 11,000.

Fong told Reuters that experience in [Big Tech firm gave founders a “strong brand](https://www.financedigest.com/big-brands-set-to-miss-plastic-sustainability-targets.html "Big brands set to miss plastic sustainability targets") that can be leveraged to meet investors, potential customers, and recruit team members.

(This story has been refiled to correct Harry Nelis’ designation to partner from [managing](https://www.financedigest.com/reckon-software-goes-from-strength-to-strength-with-appointment-of-new-partner-development-manager.html "Reckon Software goes from strength to strength with appointment of new Partner Development Manager") partner in paragraph 19)

[(Reporting by Martin Coulter in London](https://www.financedigest.com/london-reclaims-place-as-preeminent-global-financial-centre-for-the-first-time-since-2013-according-to-global-regulatory-outlook-report-from-duff-phelps.html "London reclaims place as preeminent global financial centre for the first time since 2013, according to Global Regulatory Outlook report from Duff & Phelps"), Supantha Mukherjee in Stockholm and Krystal Hu in New York; Editing by Pravin Char)


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