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Illustration: Aïda Amer/Axios

New startup formation has slowed significantly, with fading hopes for a late 2020 rebound.

Driving the news: Carta, a startup that manages employee equity for other startups (including Axios), last week laid off 161 employees, or around 16% of its staff. The basic takeaway was tempered expectations for the number of potential new customers to sign and service.

Carta arguably is an index for startups, which makes these layoffs a major indicator.

  • Yes, many of today’s most iconic tech companies were born from the ashes of past economic crises, but this one might be different.
  • No more serendipitous meetings at parties, no more sitting down with a friend to change the world on the back of a napkin.
  • Even if you and a possible co-founder are tight, and you can get past the daunting idea of all-remote hiring, you’re in unchartered waters when it comes to customer demand and supply chain stability.
  • Even if you want to build, can you?

To its credit, Carta is treating laid-off employees about as well as a company can. They all get three months of severance and COBRA coverage through year-end. Carta also removed the one-year vesting cliff for those hired within the past 12 months, and already had a generous post-termination exercise period.

But there were still a lot of ex-employee grumbles, based on a subsequent Bloomberg report that the company was "seeking to raise" $200 million in new funding at a $3 billion valuation. Plus, it's likely that many former Carta employees were aware that this money would be on top of the $200 million that sources say Carta already had in the bank.

  • The new funding is real, per multiple sources. In fact, it's basically done, co-led by existing investors Lightspeed Venture Partners. The negotiations began prior to the coronavirus outbreak, but terms never changed. The closing was delayed a bit by complications related to some overseas investors.
  • The company hasn’t yet announced the deal, although Tribe Capital did explain its thinking in a lengthy memo sent to LPs over the weekend (which it just posted here).

The bottom line: Carta is building for the future in which it hopes to thrive, while acknowledging lowered expectations for the present. Just like startup-land at large.

Go deeper

14 mins ago - World

Jerusalem crisis: Hamas fires rockets, Israel begins military campaign

Palestinian protesters and an Israeli police officer near the Damascus Gate. Photo: Amir Levy/Getty Images

Days of tensions in Jerusalem escalated into an exchange of fire on Monday, as Hamas fired dozens of rockets toward Israel and the Israeli military responded with strikes of its own and said it was preparing for a military operation that could last several days.

Why it matters: This is the first time Hamas has fired rockets at Jerusalem since 2014, and the most serious escalation between the Israelis and Palestinians in many months. It comes during the most sensitive days on the calendar — the last days of Ramadan and the Jerusalem Day commemoration on Monday — and amid political crises in both countries.

Colonial Pipeline aims to be "substantially" back online by end of week

Photo: Luke Sharrett/Bloomberg via Getty Images

The FBI confirmed in a statement Monday that a professional cybercriminal group called DarkSide was responsible for a ransomware attack on the Colonial Pipeline network, which provides roughly 45% of the fuel used on the East Coast.

The latest: Colonial said in a statement at 12:25pm ET on Monday that segments of the pipeline are being brought back online in a "stepwise fashion," with the goal of "substantially restoring operational service by the end of the week."

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios