The great Silicon Valley shake-out

The Economist - San Francisco, CA
June 28, 2022

We look at the world’s startups and identify the safe, the uneasy and the doomed

On a busy street in downtown San Francisco sit the former headquarters of Fast, a maker of check-out software for online merchants. The offices look quiet; a for-let sign hangs above one of the windows. That is a departure from its management’s flashy habits. Last year at an event announcing Tampa as its East Coast hub, the firm splurged on backflipping jet-ski riders and pickup trucks straight from the nascar race track. Fast had set investors’ pulses racing, too. It raised $125m between 2019 and 2021, including from some of Silicon Valley’s most astute venture capitalists at firms like Kleiner Perkins and Index Ventures. Then, in April, having burned through its cash and being starved of fresh capital, Fast went bust.

Fast’s demise is a sign...

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[Specific ApeVue data content and references below]

ApeVue, a data provider, offers a hint of what is happening by tracking share prices in the secondary markets, where shares of private firms can be bought and sold. An equally weighted index of the 50 most-traded startups has declined by 17% since its peak in January. Using ApeVue’s data, The Economist estimates that a basket of 12 big startups worth $1trn at the start of this year is now worth about $750bn. That list includes Stripe, a fintech star, which has seen its secondary-market share price collapse by 45% since January, and ByteDance, TikTok’s Chinese parent company, the shares of which trade at a quarter below their value six months ago.

The Economist chart showcasing ApeVue data on SpaceX, Instacart, Impossible Foods and more private markets stocks (PE).

Secondary-market valuations of private firms have not yet dropped as far as public ones. ApeVue’s index is down by about ten percentage points less than the nasdaq composite so far this year. Comparing private firms with listed rivals reveals the same pattern. The share price of Impossible Foods, a private purveyor of meatless meat, has fallen by 17% since January, while that of Beyond Meat, a listed competitor, has slid by 61%.

ApeVue's most active 50 private stocks (ApeVue50) referenced in The Economist.

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