Faltering of Tech Start-ups

Recent years have seen a major boom in technology start-ups. But now, job cuts have begun eating into these start-ups as investors are pulling back from high cost ventures involving physical assets such as scooters, mattresses, pot - and lots of labor. A newspaper counts more than 8,000 cuts at 30 companies around the world in the past four months. Disappointing public offerings by companies such as Uber and WeWork are prompting investors to scrutinize profitability. This has resulted in the fewest startups managing to raise money in this last quarter since 2016.

Unicorn, the electric scooter startup is shutting down operations after blowing all its cash on online ads but only receiving 350 orders for its e-scooters. The company is working on selling its remaining assets in order to give partial refunds. Casper sleep, a popular start-up which deliver sleeping mattresses direct to customers' doors, have fallen out of favor as private fundraising has become more difficult. The effects of this newfound discipline are rippling broadly. A string of high-profile startups has engaged in cost cutting and layoffs in the past few weeks, including Oyo hotels, delivery complete Rappi Inc. and scooter company lime Inc. The cannabis sector is also hitting a slump, weighed down by a series of scandals, regulatory deadlock and a growing sense that the industry is not delivering the gold rush-like returns that some investors were expecting.

More workers are questioning the promises from startups. The pullback will presumably not be as grievous as the dot-com bust in the early 2000s. Instead, tech startups in 2020 have large pools of money to invest, can see the writing on the wall and can making difficult decisions in order to make the necessary and healthy shift to profitability.

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