The era of making easy money is coming to an end for tech companies. Valuations of hundreds of Silicon Valley companies decreased; Caravan Car Company | NewsBust The era of making easy money is coming to an end for tech companies. Valuations of hundreds of Silicon Valley companies decreased; Caravan Car Company | NewsBust

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The era of making easy money is coming to an end for tech companies. Valuations of hundreds of Silicon Valley companies decreased; Caravan Car Company

By Vansh Sangwan - January 24, 2023

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For the last few years, the lowest rates of interest on loans have helped many start-ups to become unicorns i.e. to achieve a value of $ 1 billion. Thousands of startups came into the fray with the dream of capturing the market through software, but in the second half of 2022 and the beginning of 2023, the dream of these companies seems to be shattered when faced with the reality.

18 months back, used car retailer Carvana was at the pinnacle of business. Its market value had reached 80 billion dollars (6.5 lakh crore rupees). Now its value has come down by 98% to just $1.5 billion (Rs 12,215 crore). The company is struggling to save itself.

Used car sales up more than 25% in first year of pandemic
Carvana Company, like most startups, tried to transform the traditional car market through modern technology. Its used car sales increased by more than 25% in the first year of the pandemic. To make up for the shortfall in supply, Carvana bought cars at exorbitant prices from customers.

Made multistorey showrooms in many cities. Borrowed a large amount from the market at a high interest rate, but as soon as the pandemic ended and the interest rates increased, the sales of the Caravan declined. Two years ago, during the pandemic, Salesforce bought an office communication tool called Slack for $ 28 billion (2.28 lakh crore) with a loan of $ 10 billion, but the situation is that the company has laid off 8000 employees, most of whom Right from Slack.

Amazon’s stock market value decreased by 1 lakh crore
Even big companies like Amazon are not untouched. Since April 2020, its stock market value has decreased by about $ 1 trillion. The company is laying off 18,000 employees and shutting down operations at several locations.

Companies standing on the support of cheap loans are in trouble
Many other tech companies are seeing their fortunes reverse gear and dreams fade away. They are engaged in measures like retrenchment of employees, cost reduction. Sam Abulsamid, chief analyst at Guide House Insights, says the entire tech industry was built on cheap debt over the past 15 years. Now they are facing the reality. Their sales have come down and the cost of debt has gone up.

There is more news…

Vansh Sangwan

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