How a sluggish finance market could change Utah tech culture
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Illustration: Maura Losch/Axios
At the Silicon Slopes Summit this weekend, I had a chance to speak onstage with Vanta CEO Christina Cacioppo.
- The California-based company creates tools to automate security and privacy compliance for other startups.
State of play: We talked about how this year's sluggish tech financing could affect the culture of the tech industry.
- That got me thinking about whether Utah's tech sector could change, too.
What's happening: It's been really hard for tech startups to get financing in 2022 — a slowdown that experts say could last a while.
- With fewer investors kicking in less money, the ones who do are requiring more proof that their money won't be wasted.
Why it matters: That's a big change from just a year ago — and from the industry norms for the last couple of decades, when tech investors were more focused on the promise of future revenue growth.
- That contributed to the tech industry's reputation for extravagance; if a startup spent beyond its means early on, it was a sign of confidence, while cautious bean-counting might even come off as pessimistic.
- That also helped to create a race for flashy benefits to recruit and retain employees; Cacioppo recalled a private chef serving her three meals a day at a previous job.
The latest: Tech investors are now asking for startups' "burn rates" — that is, how much money they have to spend for one dollar of revenue, Cacioppo said.
- The new pressure to control costs could be painful for a lot of startups.
- But it also could make the industry more straightforward about proving value, and less susceptible to empty spectacle.
Between the lines: The shift to work from home already has reduced a lot of in-office expenses, but now investors are expecting even more efficiency.
- Startups may also need to reconsider lavish retreats and copious swag.
- Recruiting may focus more on direct compensation and whether an employee likes the product and the work itself, rather than luxury perks.
Zoom in: Utah is a bit different from California, and companies may not face as acute a change in the investment climate, said Clint Betts, CEO of Silicon Slopes.
- Utah startups in earlier stages are appealing to venture capitalists who don't expect investments to pay off for a decade or so anyway.
What they're saying: "Based on the types of tech companies built here, Utah may be a bit more insulated from the current funding environment," Betts told Axios.
What's next: Utah startups still need to prepare for a slowdown, which Betts said means developing "a laser focus on productivity, revenue and talent management."