Jul 17 2017: Why Do Fast-Growing Startups Gather In A Few Cities?

Back in Jul 17 2017: Why Do Fast-Growing Startups Gather In A Few Cities?

Venture capital investment is concentrated in a small number of cities such as San Francisco, Boston, and Southern California. This concentration happens because there are positive feedback loops between skilled labor and specialized inputs like venture capital.

Cities like Silicon Valley, Research Triangle Park, and Austin have become startup hubs because they have the combination of universities and companies that attract and retain talent. The network that is created in these cities becomes stronger with each new person, making it difficult for other cities to break in as startup hubs.

Fast forward to Dec 07 2023: From Unicorns to Zombies: Tech Start-Ups Run Out of Time and Money

Many once-promising tech companies are running out of time and money, leading to a surge of bankruptcies and shutdowns in the industry. Investors are no longer interested in promises and venture capital firms are deciding which companies are worth saving and urging others to sell or shut down.

This has resulted in an astonishing cash bonfire, with companies selling for far less than their previous valuations. Approximately 3,200 private venture-backed U.S. companies have gone out of business this year, raising $27.2 billion in venture funding. This year has been "the most difficult year for start-ups in at least a decade."

How are once-promising tech companies now on the verge of running out of time and money, and what does this say about the current state of the industry?