There is a time of reckoning coming for start-ups in Silicon Valley that will result in layoffs and consolidations in the industry, tech investor Chris Sacca said Tuesday.
"We're in this era where money has essentially been free," he said in an interview with CNBC's "Power Lunch."
"We have a generation of some companies that have been able to creep along without anyone giving their businesses a lot of scrutiny, really. Now I think as things slow down, investors become a little more cautious and want to actually peek beneath the covers and see what's there. Some of these companies aren't going to be able to raise [capital] again."
One such example is the ride-sharing company Lyft, which still doesn't make money on a marginal basis per ride, he said.
"They just don't have the kind of offering that Uber does. And so I don't think they survive this in the current form," said Sacca, who is an Uber investor.