2023 holds a significant meaning in the tech industry as it marks the downfall of some of the startups and biggest players. The year saw several tech giants face financial struggles, management changes and other challenges that ultimately led to their collapse.
Tech Startups Collapse
2023 was an 'extinction' level year for tech startups with nearly 20% of all startups raising money at a lower valuation than they had previously. Moreover, around 3,200 startups that failed in 2023 had raised just over $27 billion in venture funding.
Massive Tech Company Layoffs
2023 was also a tumultuous year for several big names in the technology industry with massive layoffs across the board. According to data collected by layouffs.fyi Amazon leading the list made large-scale layoffs in 2023 and reduced its workforce by 16,080 roles. Alphabet, the parent company of Google eliminates over 12,000 roles. Microsoft followed suit, cutting 11,158 roles. Further, Meta Platforms, the parent company of Facebook, not only made significant job cuts but also reduced its diversity. IBM also found itself in the same boat, having to significantly reduce its workforce in 2023.
Here are nine of the biggest tech titans that faced collapse and downfalls in 2023.
1. Silicon Valley Bank
Silicon Valley Bank, the financial hub of the tech world imploded in March 2023, making it the third-largest bank failure in the United States. Rising interest rates and a freeze on tech funding caused a "bank run," as clients withdrew their deposits in large amounts. SVB's heavy investments in struggling startups and volatile tech stocks led to its downfall. Though deposits were insured, the shockwaves rippled through Silicon Valley, impacting countless companies and employees. Despite First Citizens Bank acquiring its assets, the bank's collapse remains a stark reminder of the fragility of the tech ecosystem.
2. 'Bird' A Scooter Firm
Once a vibrant symbol of urban mobility, Bird's flight faltered in 2023. The scooter rental giant, once valued at $2.3 billion, plummeted to bankruptcy in December. Bird was delisted from the New York Stock Exchange and eventually had to file for Chapter 11 bankruptcy protection in Florida Federal Court. Despite efforts to restructure, Bird's future remains uncertain, leaving a cautionary tale for the volatile world of micromobility.
3. Convoy
Convoy once hailed as the "Uber of trucking," Convoy collapsed in 2023. The Seattle-based startup lost its co-founder and CEO, Dan Lewis, followed by several high-level executives. Market forces also played a significant role in Convoy's collapse as oversupply led to a drop in freight rates. Subsequently, the company was forced to lay off around 15% of its workforce in April. Despite raising over $668 million in venture funding, Convoy's collapse is a reminder that even the most promising startups can succumb to market forces.
4. Babylon Health
Babylon Health, once a $4 billion telehealth unicorn, faced a rapid descent in 2023. Mounting losses, failed mergers, and a disillusioned market saw the company spiral from public darling to bankruptcy by August. Critics point to unsustainable business models, inflated hype, and a lack of profitability as key culprits. Though its UK arm was acquired by eMed, Babylon's demise serves as a warning for overvalued tech startups.
5. WeWork
WeWork a coworking giant collapse in November 2023 was arguably the most dramatic tech downfall of the year. From a $47 billion behemoth, WeWork imploded and filed for bankruptcy, leaving thousands jobless. It's a stark reminder of the dangers of unchecked growth, inflated valuations, and ignoring market realities.
6. Embark Trucks
A self-driving truck startup that promised to revolutionize the trucking industry faced a harsh reality in 2023. Despite securing over $400 million in funding and partnering with major players like Volvo Trucks, Embark Trucks shut down in October 2023. The closure of Embark sent shockwaves through the autonomous trucking industry, making us question the viability of the technology and the future of similar startups.
7. Peloton
Peloton, the at-home fitness giant, stumbled hard in 2023. The company's stock tanked by over 50%, leading to a significant loss of market capitalization. Peloton faced backlash from consumers and regulators for its safety concerns and faulty equipment, tarnishing its once squeaky-clean image. In addition, supply chain disruptions and rising competition further contributed to Peloton's downfall in 2023.
8. Hyperloop One
Hyperloop One, one of the most hyped transportation technologies in recent years, faced a bumpy ride in 2023. Despite securing over $450 million in funding from several high-profile partnerships and successfully test the first passenger test ride in 2020, the company struggled to deliver on its promises and collapsed in 2023.
9. Olive
Olive, the healthcare AI startup that promised to automate medical billing and streamline revenue cycles, withered and shut down in October 2023. Despite garnering a $4 billion valuation and securing millions in funding, Olive's aggressive expansion and overreliance on venture capital proved unsustainable. Internal struggles, coupled with a sluggish healthcare market and investor disenchantment, led to its sale of assets and eventual closure.
Conclusion
Overall, 2023 was a disaster for the tech industry. So many big companies and startups facing significant downfalls. Heavy hitters such as Silicon Valley Bank, Bird, Convoy, Babylon Health, WeWork, Embark Trucks, and Peloton all experienced crises, leading to the failure or sharp decline of their businesses. As we look towards 2024, experts predict a continued downturn for the tech sector, with funding drying up and market realities catching up to overvalued companies.
