Many local tech startups and the investors who back them were glad to turn the page on 2023. After a long upward run for the sector, last year marked a sharp downturn filled with layoffs and shutdowns, with several piling up in the past month.
The pain resulted from a combination of factors, including the Federal Reserve’s interest rate hikes, slowing consumer spending online, and the realization that too much money went to startups with shaky business plans over the past few years. Silicon Valley Bank’s sudden failure in March didn’t help matters.
Fundraising figures for the year will be released in coming weeks, but through three quarters, startups in Massachusetts had raised $12.6 billion, down 26 percent from the same period in 2022 and 49 percent less than the first three quarters of 2021, according to PitchBook and the National Venture Capital Association. And local venture capital firms were on pace to raise less than $7 billion, down 40 percent from 2022 and the lowest total since 2018.
In recent weeks, the news has been filled with fallout from the slowdown.
Boston-based OpenView Venture Partners, founded in 2006, laid off half its staff in December despite raising a new fund in March. The $570 million fund, the firm’s seventh, will stop making new investments, Forbes and The Information reported.
The problem was a lack of leadership, one former employee said. Partner Mackey Craven decided to leave the firm about six months after Ricky Pelletier, also a partner, had departed, leaving a void at the top. “They don’t have enough partners to support the fund’s limited partners anymore,” the former employee said. “It’s not anything about fund performance but more about internal politics.”
Craven and OpenView founder Scott Maxwell didn’t respond to a request for comment.
At Boston VC firm Accomplice, Ryan Moore, one of two remaining cofounders, departed last month, leaving only Jeff Fagnan at the firm. Started in 2015 (when it split off from the life sciences arm of Atlas Venture), Accomplice funds backed cybersecurity company Carbon Black, online pharmacy PillPack, and DraftKings, among others, and was an active crypto investor. The firm raised a fund of more than $400 million in 2022, which was reported by Axios as its “last fund.”
Moore, who remains on the board of DraftKings, could not be reached. In an email, Fagnan confirmed Moore’s departure but declined to comment further.
Layoffs also hit Visible Hands, a VC firm which focuses on helping underrepresented founders start companies. The firm laid off seven people, almost half its staff, amid an especially difficult market for diversity-focused funds to raise money.
“We are well resourced for 2024 and beyond,” partner Yasmin Cruz Ferrine said. “We are looking forward to building on the success we’ve built thus far in 2024 and beyond.”
Meanwhile, after a decade of focus on the “micromobility” market, electric scooter maker Superpedestrian in Cambridge is closing its US operations and looking to sell its European business. Numerous US employees were laid off in December, several confirmed to the Globe.
Spun out of the MIT Senseable City Lab a decade ago, Superpedestrian initially made an electric motor that could be retrofitted to ordinary bicycles. In 2019, the startup shifted its focus to scooters and built a worldwide rental business in dozens of cities. But investors have soured on the sector, and larger rival Bird declared bankruptcy in December.
“3 years after launching the first LINK scooter, Superpedestrian is closing its US business,” senior product manager Emmett McKinney posted on LinkedIn. “It’s tough to see this ride end; no way around that. But I am extremely proud of all that this team accomplished.”
Founder and chief executive Assaf Biderman didn’t respond to a request for comment.