Culling of Money-Losing Startups is Well Underway

A week before Christmas, venture capitalist Elad Gil tweeted, “Lots of year end company shutdowns…happening right now,” offering a tantalizing hint of behind-the-scenes drama. Gil’s tweet appears to have been on the money: At least three companies have closed their doors since then—accounting firm Bench last week, LinkedIn rival Polywork earlier this week and benefits outfit Level, whose shuttering was first reported by The Information on Thursday. 

Given Gil’s vantage point—see this profile of the investor—you have to assume more such closures are on the way. Several of those shutting their doors are part of the ZIRP generation, firms that raised money during the ultralow interest rate environment that followed the Covid-19 pandemic. In that period—particularly 2021—money was so cheap that venture capitalists were throwing it at any startup with a wisp of an idea, no matter how ill conceived. Both Bench and Level last raised money in mid-2021, according to PitchBook.