As the downturn hits crypto, a key startup investment source may slow

The startup sector was hot in the 2021. Records were set by every geography. Venture capitalists paid steep prices for startup shares and new business models flourished.

We saw a bracing return to the mean halfway through the year. The startup sectors seem to be more focused on the present than the future. The pendulum of relative power has swung back towards venture capitalists, startup prices are falling, and some ideas that ruled the roost in 2021 are in disarray

The business cycle always turns, so this shouldn't be a surprise.

It wasn't all at once. It looks like the feedback loop between falling public market prices and reduced startup activity first appeared in the software market. The retreat in investing in software companies on the public markets is still being felt by newer tech companies of all maturities.

Markets and money are explored by the Exchange.

You can get The Exchange newsletter on Saturdays.

It held on to its cheer for a bit. By the end of March, the U.S. coin exchange was worth more than 40 billion dollars. As April saw its shares start their slide, this column was writing that "no one told the crypto world that startup mega deals aren't as plentiful anymore."

The pain of the current downturn set in more slowly in the crypto market, perhaps because the blockchain domain is something of a parallel economy to the one we interact with every day. Sure, they are directly linked, but perhaps not as closely as, say, traditional startups and the Nasdaq.

The time when companies were able to avoid the downturn by working on their own visions is over.

Growth, layoffs, M&A

It was recently announced that it was pausing hiring. The company boosted its technology investments in the first quarter of the year. The cost structure was mentioned in the company's Q1 earnings report.

Technology and development expenses were $571 million, up 24% compared to Q4, and were driven by technical hiring related to our continued investments in product innovation and platform infrastructure.

The company said that it would keep spending within reason.