Is the high-tech market a threat or opportunity?

This is a question that arises as we observe the decline that characterizes the technological market today. Some view this trend as a threat, but is it possible to see an opportunity in it? To examine this issue, it is important to first understand the peak period of the technological market. In recent years, high-tech companies and start-ups have raised significant amounts of money based on exorbitant company values. This resulted in a bubble created by an excess of money in both local and global markets. Much of this money was diverted to investments in the technology market due to factors such as printing money in the American market and low interest rates. Additionally, venture capital funds, which typically focus on larger investments, played a significant role in the influx of funds to the technology market, with investment decisions often based on the amount requested and the investment potential. The influx of large sums of investment capital created a situation where it was relatively easy to raise significant capital. However, in many cases, the company's valuations were overstated and without any practical justification for the company's value. More than once, those companies seeking investment did not reach defined "milestones" to justify such high valuations, but it was possible, so why not? Companies have rapidly achieved "unicorn" status, a term initially intended to signify rarity but now commonplace. Additionally, we have observed a shift among "established" companies from opting for a sale, known as an exit (M&A), to choosing an initial public offering (IPO). The rationale behind this varies based on who you ask. Some may argue that the start-up market has matured to the point where companies are no longer interested in building them to sell, but instead aim to develop them into large, impactful businesses that provide employment opportunities. Others contend that, given the high valuations, few firms are willing or able to acquire start-ups, particularly when many are valued in the billions of dollar.

Who benefits the most from this situation? 

The individuals who have reaped the most benefits from this scenario are primarily the entrepreneurs of the company, salaried employees who held shares or options, and previous investors who held shares in the company. This group has experienced substantial returns, resulting in the emergence of a new wave of millionaires. It is important to note that this success was achieved through a fair and transparent process, with all parties investing significant resources and efforts. Ultimately, the free market's supply and demand dynamics have driven this outcome. The group that continues to benefit from this situation are salaried workers, particularly those in the technology industry, where the supply-demand ratio heavily favors the supply side. Due to a high demand for skilled and talented workers, coupled with a relatively low supply, intense competition has arisen to both acquire and retain such individuals in companies. This has resulted in disproportionately high salaries and favorable employment conditions. It is important to recognize that such a dynamic is a natural consequence of the free market's supply-demand dynamics. The pre-peak period shareholders on the investor list also garnered a handsome profit, and I commend them for it. After all, who isn't interested in a good deal? It is important to acknowledge that venture capital investors typically expect success in only one or two out of every ten investments. Thus, investors tend not to dwell on their failures and instead focus on their successful ventures. Personally, I am in favor of profitable business and transactions, as there is a wide range of beneficiaries from the profits, including tax authorities. Therefore, it can be argued that a significant proportion of the population benefits, either directly or indirectly through tax payments. 

Who benefits the least?

 The group that stands to benefit the least are those who invested at the peak point. In many cases, the value of their stock plummeted dramatically post-investment, leaving them with meager chances of earning a profit. While it is possible for the stock value to rise again, it is not a certainty. Thus, those who choose to wait for a rebound may be able to eventually benefit from a higher stock value and a more favorable outcome. Young start-up ventures, lacking significant resources, faced tremendous difficulties in attracting technological talent for their ventures, simply because they could not compete with larger start-up companies that had raised substantial amounts of funding and possessed sizable cash reserves. These larger companies offered attractive compensation packages and exorbitant terms, making it considerably easier for them to recruit the best programmers. Despite the intense competition among them, these larger companies managed to secure the top technological talents. In fact, the situation was reminiscent of the skits from the comedy series "Wonderful Land (Eretz Nehederet)," where the company's employees compete over the number of ice cream flavors and new Teslas. However, behind the humor and slapstick, there are significant parallels with the reality of the situation. In reality, there were fewer young ventures that were successful in raising capital, but those that did manage to secure funding raised a significant amount of initial capital. Prior to the peak period, seed fundraising rounds typically ranged from hundreds of thousands of dollars to one and a half million dollars. However, during the peak period, seed rounds skyrocketed to several million dollars. It is unclear whether the entrepreneurs knew how to effectively manage and allocate such a substantial amount of capital at such an early stage. In some cases, the transition from a lean and efficient business model to a model with excessive resources occurred too early and too rapidly, without practical justification or significant milestones to support the decision. The period of the market boom did not come as a surprise, and it was widely anticipated that the celebration would eventually take on a different format. Once certain market conditions, such as interest rate increases and global factors, began to shift, it became apparent that the party would likely come to an end in accordance with the new market conditions. It should be noted that this is simply a description of the state of the market as it was until recently and is not intended as criticism. 

One may ask, where does the opportunity lie in this situation? 

That's an excellent question. It's important to note that every market operates in a cyclical manner, with varying degrees of peaks and valleys. While the recent period of growth was certainly desirable, a return to a more sustainable balance is necessary. As the saying goes, even a Tesla from the morning is excellent; a fresh Tesla from the afternoon isn't needed. So, what are the potential benefits of this shift in the market? As a result of the market correction, companies will have to demonstrate more tangible achievements to attract investments. They will need to present market-proof feasibility, putting more effort into achieving results that can justify investments. This shift in focus will benefit new investors, as they will have more realistic expectations for returns on their investment, without needing to receive shares in exchange. Moreover, companies will have the ability to retain talented employees for longer periods of time, without the daily temptations of competing offers from other companies. Achieving a more balanced power dynamic between employers and employees will also benefit both parties in the long run. The constant "predation" of employees moving between companies will decrease, allowing for a higher sense of identity between the employee and the company. In turn, companies can create a more loyal and dedicated workforce, while employees can enjoy job security and a stronger connection to their workplace. The recent wave of layoffs presents an opportunity for new start-ups to emerge. Many of those who were laid off will receive generous compensation packages, and those who have always dreamed of starting their own business but lacked the courage to do so may see this as the perfect time to take a risk. If successful, they will realize a fulfillment of their dreams and all its accompanying benefits. In the event of being less successful, these individuals have the option of re-entering the job market, and potentially taking advantage of a market upswing that generates fresh opportunities. The current situation presents a promising prospect for tech entrepreneurs seeking partners and talented individuals aspiring to join a high-potential start-up. This offers numerous benefits and exciting opportunities for both parties. Therefore, the aforementioned is a comprehensive list of opportunities. For those who sought guidance on how to make the most out of adverse circumstances, I trust that this article shed light on the situation from a different perspective.

    Lior Cohen, the founder and CEO of WWM Ventures, is an accomplished entrepreneur, mentor, and lecturer with a wealth of experience in senior positions in the technology market. He also serves as a member of the advisory board of various technology companies and hosts the radio show "First in Startup." For further inquiries, you may contact Lior directly via email at