WeWork’s crash last year was a sign of what is to come for technology companies. Venture capital funds—whether due to WeWork, the handful or failed tech IPOs in 2019 or simply changing market trends—will now want evidence of profitability, not just growth and market share. This is a turnaround for tech companies, which have focused on rapid growth and expansion first.
“Venture capital will no longer fund these continuous losses any more. They will stop funding these companies until they see a path to profitability,” David Shulman, senior economist for the Ziman Center and UCLA Anderson Forecast, tells GlobeSt.com. “Tech firms will have to go for profitability as opposed to just going for growth.”