But Jess Wild markets are still open. Here, we're going to have a great talk with Marlee's Van Romberg, editor and chief at crunch Base. She's joining us on zoom from San Francisco to talk all things tech and an outlook from crunch Base for the second half of the year. Marlee's thanks so much for getting on a call with us on this half holiday. Here. You have a report that your organization did on the outlook for twenty twenty
three that I found so interesting. One of the results saying that companies only have six months of runway left in the bank. That's according to almost a third of your company respondents there. What are the other big standout data points for you when it comes to that midyear report from crunch Base.
Yue, good morning, Thank you for having me so. Yes, we actually just published we do a quarterly reader survey. So these are mostly obviously people in tech and venture capital who are taking that survey and sort of telling us that they're thinking. And some of the things that we've been tracking since the beginning of the year is, as you mentioned, runway. That's a big hot topic right now is how much money do startups have before they
start running out of cash. And what I thought was really interesting this time around was, as you mentioned, about a third of respondents who answered that question said that they actually have less than six months of runway, which is definitely, you know, sort of red alarm status for your company, particularly given that venture funding is very difficult to come by, so you know, that's really an emergency
situation for those companies. What was also interesting is that it seems to be kind of a barbell, about the same percentage who answered the question said they have more than twenty four months of runway. So it seems like there's almost these two classes of companies that are emerging right now. Those that are doing pretty well on managing their cash and can probably you know, kind of survive the current environment if if nothing else big kind of
comes along. And then there are those that are really in a difficult situation right now. And I think that might be where we start to see uh more mergers and acquisitions. It's something we've sort of been anticipating in the startup world for a while and haven't quite seen that come along. But there were actually quite a few larger deals announced last week, including the Big Data Breaks purchase of another venture back startup, so you know, we might start to see some of those trends emerge.
Now, what's been the catalyst for why there's been a divergence between those that are still doing well and then you have on the opposite side of that those that are struggling to get that funding?
You know, I think I think there are a lot of factors at play. In general, funding is hard to come by for all companies right now, with you know, some obvious exceptions like AI. Investors are very very interested in what's going on. Then, you know, I think when money was easy to come by, a lot of startups dig over higher. And that's why we're seeing a lot of layoffs in the sector right now, as you know,
some of those corrections are being made. I think, you know, some companies were really kind of trying to grab as much market share as they could when when things were hot, and as the market slowing down now, you know, maybe didn't manage the cash they had as well as they could have.
How much of this could be repercussions to what happened with SVB and some of these other banks that we saw earlier in the spring.
Yeah, I think we you know, really can't overstate the impact that the collapse of the SDB had on this sector. You know, partly it was really an impact to the confidence in venture backed startups, but you know, it's also just SVB was was by far the largest source of venture debt for a lot of startups, So that's something that's become even harder to come by and for a lot of companies as venture funding became more difficult, venture debt was was sort of a plan B, so that's
become more difficult as well. Well.
Even though that space has been a challenge, AI is certainly alive and well here when it comes to funding for these AI firms, what are you hearing people look at and question when sussing out which firms to invest in. I think about the difference between the guests that we have on who talk about betting on a C three AI versus you know, a qual Calm or an Intel some of these names that are AI adjacent but a little bit more stable. What are you hearing when it comes to that decision making.
Yeah, you know, obviously there's a lot of interest and hype kind of around generative AI, but what we're also seeing is investors are really interested in more of those kind of infrastructure companies that are going to be powering a lot of what's going on in AI that are sort of you know, adjacent or tangential to the core AI companies. There's a lot of interest in that. I think one investor who spoke with us kind of, you know, described it as looking for the nuts and bolts that
are going to be powering the AI revolution. There's a lot of money going into that as well, you know. I think, as with anything startup or venture capital, we are also seeing a lot of companies that are sort of just grabbing the AI label and sort of trying to affiliate themselves with that. And I think with time we'll sort of see a bit of a sorting there of what's real and what's not.
We only have about a minute left, but what's next that you're keeping your focus on on your radar as far as what the trajectory could be. When we're talking about these companies that are going through angel investment or these seed funding grounds, you.
Know, I think seed funding at the beginning of this venture downturn had held out fairly well, and that's not surprising. It was really the late stage startups that were the most impacted, but we are starting to see that downturn trickle down through to the earliest stages, and that's, frankly, that's worrisome because that's you know, the next class of companies that are going to be unicorns, you know, five
ten years down the road. And so I think we will see this decline really kind of extend for quite some time, with exceptions around some of these sectors that really get a lot of funding, but right now we're seeing venture funding down across all stages of funding.
All right, MARLEEZ, thank you so much for joining us to talk about your outlook and some of the picture when it comes to funding for startups in San Francisco and more broadly in the tech space. Really appreciate it. That was Marlee's Van Romberg. She is editor in chief of crunch Base.