Investors and entrepreneurs celebrated success at the ninth annual Crunchies Awards in San Francisco. But irrational exuberance was in short supply at the end of a day, when Zenefits, nominated in the fastest rising start-up category, announced an executive reorganization.
The Valley is in the midst of a correction, and that is a good thing, said insiders. It has become harder to raise money, terms like "cash-flow positive" and "sustainable growth" are coming into fashion, and venture capitalists are doing something they haven't done in years — they're saying "no."
"The party is over and we all have hangovers," said Menlo Ventures partner Venky Ganesan, incoming chairman of the National Venture Capital Association. "We have to take a couple of aspirin and ride through the pain."
The latest data from PitchBook show that VC investing in U.S. companies dipped to $9.3 billion in the first quarter of 2016, down from $17.6 billion in the fourth quarter. "There's significant uncertainty in the market right now and (we) would advise companies looking to raise capital to close quick and — while financing is available — maybe close on more capital than is necessary to be prudent in this environment," said PitchBook analyst Garrett Black.
At Tech Crunch's Crunchies awards Monday night, the best new start-up prize went to Honor, which is focused on tackling home care. That market is expected to reach $355 billion by 2020, according to a recent study by Grand View Research.