So long, easy money
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So long, easy money

Source Code

Good morning! Well, it was a good run, and now it’s over: Venture capital’s money hose is drying up, and the effects are already reverberating throughout the tech industry. I’m Biz Carson, and I once wrote a senior thesis in college on the politics of Eurovision voting. Congrats to Ukraine!

The boom in VC bust advice

The clearest indicator of a bursting bubble? Maybe it’s the sheer volume of “RIP Good Times” tweets from venture capitalists and the sage advice they’re offering founders on how to cut back, buckle down and brace for impact. Craft Ventures posted David Sacks’ slides on operating during a downturn (like he did at PayPal two decades ago). Lightspeed Venture Partners posted charts of past corrections. Ho Nam of Altos Ventures even had some meta advice for his fellow VCs: “If you manage to survive, this downturn is like a gift.” Everything is a learning experience!

One key lesson is how to spot the red flags. The public market’s nosedive is just the first domino toppling in the VC world.

  • SoftBank said it was pulling back by 50-75% on startup investments after it hemorrhaged billions of dollars on tech investments. Already startups were concerned they were being left to die by the firm, and now it’s confirmed the escape hatch is closed.
  • Tiger Global lost $17 billion, has almost fully invested its latest fund and has cut back its public tech-stock portfolio, dumping Bumble, DiDi, Affirm and others. “If you owned growth stocks this year — like we did at Altimeter — you got your face ripped off,” Altimeter’s Brad Gerstner tweeted in a thread where he conceded the hedge fund did not hedge enough.
  • Crypto has possibly had it even worse, to the point that even Ryanair is roasting “crypto bros” on Twitter. Coinbase’s value has fallen nearly 80% since its direct listing last year and is now lower than where a lot of its late-stage investors bought in.

What does that mean for startups? “The firehose of money that has been pointed at these companies is going to be 70-80% smaller,” one investor told me. And it’s poor timing to have the money hose dry up.

  • Right now, startups are facing contractions in valuation — not revenue, which was the case in early COVID days. Public-market comps are down 60% or more in some sectors, and they tend to be the leading indicator of how VCs are similarly going to value startups down the road. That means startups are going to need more revenue to survive and justify their valuations.
  • Many entrepreneurs will be faced with two options: trim expenditures, like what we’re seeing with layoffs, and increase capital efficiency, or raise more money to get the extra runway needed to grow into it. More often, it’s a combination of both.

Easy money is dead. That goes for both startups and VCs themselves, who must hit up limited partners to raise new funds and are suddenly encountering a lot of hands stuck in pockets.

  • Venture capitalists have moved the goalposts for what they’re funding. It’s not about how fast you move, it’s about how little capital it takes to get you there.
  • With public comps destroyed and investors like SoftBank sitting on the sidelines, startups and VCs have to re-run the numbers and not assume money will just materialize.

The lingering question for startups: Is your worst-case scenario really worst-case enough? If not, there’s a VC waiting to tell you just how bad things can get.

Biz Carson (email | twitter)

A version of this story originally appeared in Protocol Pipeline. Subscribe now for more VC news and analysis.


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People are talking

Elon Musk is mad Tesla was knocked off the S&P 500 ESG list:

  • “It has been weaponized by phony social justice warriors.”

Jeff Bezos is here to remind you that Wall Street hated AWS when it launched:

  • “The ‘risky bet’ that Wall Street disliked was AWS, which generated revenue of more than $62 billion last year.”

Starting a QR code campaign? Beaconstac's Ravi Pratap Maddimsetty said to make sure it's secure:

  • “One big problem is that companies set up QR code campaigns and then they forget about it."
Don't deflect blame from the UST and luna crash, Circle's Jeremy Allaire said:
  • "Frankly, I'm very disappointed in a lot of people."
Meanwhile, Gary Gensler said no one’s safe from the crypto meltdown:
  • “The public is not protected. They don't have the disclosures from these entrepreneurs.”

Making moves

The DHS’ new Disinformation Governance Board is on hold. Board leader Nina Jankowicz also left after a wave of harassment. So that's off to a great start.

Former Disney CEO Bob Iger is a new adviser and investor in Gopuff. The terms of Iger’s investment were not disclosed. Maybe it'll take his mind off the rumored feud with Bob Chapek.

Sivanne Goldfarb is the new VP of Risk, Credit & Data Products at Melio. Goldfarb was recently the head of Data Science and Data Engineering, Fraud and Compliance at Meta Fintech.

Marshall Tyler is ClickUp’s new chief strategy officer. He previously worked in global ops at Salesforce and ServiceNow.

Alex Goldman and Emmanuel Dzotsi are leaving Reply All. The show was a staple of Spotify-owned Gimlet, and won’t be continuing in “this iteration” after June 23, its last episode. Leaving things wide open for a next iteration, though!

In other news

Tech platforms are being investigatedby the New York attorney general’s office for their role in the Buffalo shooting. Discord and Twitch, among others, are under the microscope.

Salesforce is the latest company to slow hiring and scale back on expenses like corporate travel and upcoming off-sites.

Block outlined plans for its bitcoin wallet. You know, the one that looks like a rock. Block plans to make money from it with subscriptions. Perfect timing for a big crypto launch!

TikTok's next big quest is in gaming, sources told Reuters. It's been conducting in-app gaming tests in Vietnam.

The FTC is coming for ed tech. The commission plans to vote on a measure today that could bring more action against kid's online privacy violations

Texas is appealing to the Supreme Court to maintain its social media law.

A16z is getting into the gaming industry with a $600 million gaming fund called Games Fund One.

Your bonkers fact of the day: It’s easier to find an Airbnb than an apartment in New York City right now.

People don’t mind ad-supported tiers, according to a new study from Morning Consult. Almost three out of five U.S. adults would prefer a cheaper ad-based subscription. Millennials support the tier the most, because of course they do.

Who’s your dream commencement speaker?

Graduation season is upon us, and some of the biggest figures in tech were tapped to give a coveted commencement address. Tim Cook and LinkedIn’s Reid Hoffman are among the leaders dressed in ceremonial cap and gown this year.

Which tech leader would you like to see deliver a commencement address? Would you want Elon Musk on the stage, or would you prefer that Susan Wojcicki give a speech? Respond to this email and let us know, and we’ll round up our favorites in the Sunday edition of Source Code. Bonus points for your reactions to Taylor Swift’s speech at New York University.


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Thoughts, questions, tips? Send them to, or our tips line, Enjoy your day, see you tomorrow.

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