Reuters
Reuters
LISBON (Reuters Breakingviews) – Tech bubbles are bursting everywhere. Web Summit, the sector’s annual bash held in Lisbon, is doing the opposite. Volumes of newly mask-free attendees to the event co-founded by Paddy Cosgrave in Dublin a decade ago have returned to their pre-pandemic levels of over 70,000, compared to some 40,000 last year.
Some things are as they were. Web Summit-goers still get to gawp at Boston Dynamics’ robotic dogs and quaff wine served from midday in some parts of the Altice Arena. And the usual welter of tech companies, investors and celebrities are still milling around. Binance’s Changpeng Zhao, Ark Invest’s Cathie Wood, Uber Technologies whistleblower Mark MacGann and Formula 1 legend Toto Wolff were all pressing the flesh. So was Ukraine’s first lady, Olena Zelenska, and Vice Prime Minister Mykhailo Fedorov, even if the intrusion of 2022’s war-torn reality created an awkward moment when organisers rescinded an invitation for speakers from The Grayzone, a website that has published content critical of the Ukrainian government.
The reality of tech’s big implosion in 2022 was not exactly writ large in Lisbon, though. The shaven-headed Zhao opined on stage that crypto was probably the only stable thing in a volatile and uncertain economic environment. The Binance boss, who just invested $500 million in Elon Musk’s buyout of Twitter, was presumably referring to crypto technology rather than the price of digital assets: bitcoin has fallen 60% this year.
Others were also keen to show they weren’t panicking. Only 8% of venture capitalists surveyed by PitchBook at the conference said they planned to significantly pull back on investing due to rising inflation rates. The recent big falls in Big Tech share prices also didn’t appear high up the list of worries for investors and startups. On the contrary, some still see Mark Zuckerberg’s Meta Platforms, which has lost more than $700 billion of its market value since September last year while doubling up on building the so-called metaverse, as a potential winner. “What if he is right?” Lightspeed Venture Partners’ Anand Iyer told Breakingivews.
In one sense, Web Summiteers can afford to inhabit an alternate reality for a while longer. Investors may own a slew of assets that are worth less than they were, but company balance sheets remain flush with cash after a record amount of funding rounds in the past two years. Fintech firms Revolut and Checkout.com said they were in no hurry to go public or raise cash, which is just as well given the valuation plunge Klarna endured when it did its own “down round”. And PitchBook data shows U.S. venture capital funds’ uninvested capital is now $290 billion, the highest since 2006.
Still, there are tangible signs that some things have changed. After two years of investing virtually in cash-burning startups, investors told Breakingviews that they now find it riskier to invest in the outfits of people that they haven’t spent time with. In other words, a degree of arguably much-needed due diligence is back in. Meanwhile, fundraising activity hit a two-year low at the end of September, according to KPMG. Privately held fintech Stripe, which in the summer lowered its valuation to $74 billion, on Thursday announced layoffs and admitted it had spent way too much in the past two years. It won’t be the last.
That new strain of reality-based tech investing has a lot further to go, though. The relative lack of investor focus at Web Summit on new technologies that could really move the dial, such as ways to ease climate change, is striking. The number of panels still obsessing about the metaverse, blockchain and cryptocurrencies is still way more than those focusing on the likes of climate technology. Part of the reason for that may be that many crypto supporters have in the past year flocked to Portugal because the government does not tax profits made from virtual currencies, like they do in Italy and France.
For his part, Microsoft President Brad Smith believes that the climate tech sector is gaining traction. The sector, Smith told Breakingviews, will increasingly “influence what people talk about and who comes to Web Summit”. The smartest venture capitalists attending this year’s shindig will have taken note and will already be investing now, while valuations are still cheap.
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CONTEXT NEWS
Web Summit took place in Lisbon between Nov. 1 and Nov. 4.
(Editing by George Hay and Pranav Kiran)
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