OpenAI and Microsoft Are Partners, Until They Vie for the Same Customers Read More

The offices of venture firm Sequoia Capital on Sand Hill Road in Menlo Park, California. Photo by Bloomberg

Amid Downturn, Silicon Valley’s Balance of Power Shifts From Startups to VCs

Photo: The offices of venture firm Sequoia Capital on Sand Hill Road in Menlo Park, California. Photo by Bloomberg

For years, entrepreneurs have called the shots in Silicon Valley’s startup ecosystem as an abundance of capital chased a limited supply of good ideas. 

But in a matter of weeks, as businesses everywhere lurch to a halt due to the coronavirus pandemic, the pendulum has swung decidedly back toward venture capitalists. These investors say cash-hungry startups are now coming to them for investments on more favorable terms, offering more equity for less money than in the past. 

“If you need to raise money, you’re kind of screwed,” said Mitchell Green, a founding partner of Lead Edge Capital, a growth equity firm with investments in Uber and Spotify. “Over the last decade, companies have had the upper hand because there’s so much money. Now, if you are forced to raise capital, [investors] will have the upper hand and be able to get good prices.”

Get access to exclusive coverage
Read deeply reported stories from the largest newsroom in tech.
Latest Articles
 
The Briefing facebook media/telecom
U.S. Tech Should Support TikTok at This Moment
TikTok CEO Shou Zi Chew. Photo by Bloomberg.
If Steve Martin were to remake his 1984 film “Lonely Guy” this year, he could center it around Shou Zi Chew, CEO of TikTok. It’s a paradox that the executive leading one of the most popular apps in the U.S. is basically on his own as he fights the threat of a ban from both the Biden administration and congressional opponents. The few people who have publicly come out in support of TikTok...
Latest Briefs
 
Kraken To Suspend ACH Transfers
Coinbase Says it Received Wells Notice From SEC
Virgin Orbit Nears $200 Million Funding Deal
Stay in the know
Receive a summary of the day's top tech news—distilled into one email.
Access on the go
View stories on our mobile app and tune into our weekly podcast.
Join live video Q&A’s
Deep-dive into topics like startups and autonomous vehicles with our top reporters and other executives.
Enjoy a clutter-free experience
Read without any banner ads.
Sarah Nagy gives a demo of her startup, Seek.ai, at an AI event at the San Francisco Wine Society in January. Photography by Laura Morton
First Look startups ai
Boom Times in San Francisco’s AI Underground
Not even a banking crisis could chill the fever sweeping San Francisco. Last Wednesday, as the tech industry recoiled from the collapse of Silicon Valley Bank, a party was scheduled at the offices of Maverick Ventures in an old army hospital in the Presidio.
Cover art and portraits by Clark Miller
The Big Read
The Instant Oral History of the Silicon Valley Bank Collapse
On a cosmic level, the collapse of Silicon Valley Bank was a mere blip. The murmurs about trouble began last Wednesday, the panic spread via group texts and Twitter threads on Thursday, the bank went under on Friday, the government got its act together on Saturday, and on Sunday every current and former customer of SVB could breathe a cautious sigh of relief.
Clockwise from top left: Julie Bornstein, Esther Crawford, Mark Hammond, Max Cutler, Kağan Sümer. Photos via Julie Bernstein, Robert Cowherd, Microsoft, Wikimedia and Kağan Sümer.
Free Agents startups
On the Market: The Founders Who Joined Microsoft, Spotify, Coinbase and Twitter
Call them acqui-fires. Several founders who took positions at the bigger tech companies that bought their startups recently lost their jobs when layoffs rolled through Silicon Valley.
Art by Clark Miller.
Opinion startups economy
SVB Is Dead. Long Live SVB.
We all know how it began. It started on March 9, when the run on Silicon Valley Bank made the innovation economy totter and threatened a global financial crisis.
Tonal’s now-shuttered Palo Alto, Calif. retail store. Photo by Getty.
Exclusive startups
Tonal’s Valuation May Fall 90% in ‘Cram-Down’ Financing
Tonal, a fitness startup with a cadre of celebrity backers, is crunched for cash after failing to find a buyer.
SpaceX CEO Elon Musk last August. Photo by Bloomberg
Exclusive startups electric vehicles
SpaceX Plans New Funding With Backing From Saudi, UAE Investors
A subsidiary of Saudi Arabia’s investment fund and an Abu Dhabi investment firm are planning to invest in a multibillion-dollar funding round for SpaceX, Elon Musk’s rocket company, according to people familiar with the investor discussions.