The full extent of the losses is hard to determine as private tech companies are not obligated to disclose when they go out of business or sell. Despite the industry's downturn, there has been a surge in companies focusing on artificial intelligence. However, approximately 3,200 private venture-backed U.S. companies have gone out of business this year, having raised $27.2 billion in venture funding. This data likely underestimates the total number of failures, as many companies go out of business quietly and it excludes large failures that went public or found buyers.
Key takeaways:
- Many young tech companies, after staving off collapse by cutting costs, are now running out of options and facing bankruptcy or shutdown. This includes WeWork, Olive AI, Convoy, and Veev, which have raised billions in funding.
- Investors are no longer interested in promises and are deciding which young companies are worth saving, urging others to shut down or sell. This has led to a significant loss of investment, such as Hopin selling its main business for just $15 million after raising over $1.6 billion.
- Approximately 3,200 private venture-backed U.S. companies have gone out of business this year, having raised $27.2 billion in venture funding. This data, compiled by PitchBook, likely undercounts the total as many companies go out of business quietly.
- The industry's downturn has been masked by a boom in companies focused on artificial intelligence, which has attracted hype and funding over the last year.