WeWork's crashlast year was a sign of what is to come for technology companies.Venture capital funds—whether due to WeWork, the handful or failedtech IPOs in 2019 or simply changing market trends—will now wantevidence of profitability, not just growth and market share. Thisis a turnaround for tech companies, which have focused on rapidgrowth and expansion first.
"Venture capital will no longer fund these continuous losses anymore. They will stop funding these companies until they see a pathto profitability," David Shulman, senior economistfor the Ziman Center and UCLA AndersonForecast, tells GlobeSt.com. "Tech firms will have to gofor profitability as opposed to just going for growth."
Last year, several tech companies, like Uber, for example, inaddition to WeWork, launched unsuccessful IPOs. These showed aweakness in the market, and as a result, tech firms are going toneed to switch strategies. "The market isn't going to accept lossesforever. You are going to need to show a path to profitability,"says Shulman. "That means slowing down growth as profitabilitybecomes more important."
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