Five years ago, a company called Yo raised $1.5 million at a $10 million valuation.
What did investors and end-users get for this much money? An app that allowed users to send the message “Yo,” (and NOTHING else) to their friends.
It didn’t take long for the company to blow through all that cash in typical Silicon Valley manner, and let go of all its employees.
At the peak of investing hysteria, it was that easy to scoop up a couple million dollars to fund your company, no matter how worthless the idea.
With so much easy money from low interest rates and booming stocks, people were dumping money into anything with a pulse.
There’s still a lot of money out there today. But investors have tightened their purse strings and become more discriminating with where they put their money.
Last year’s venture capital was distributed to fewer businesses, and it went to more established companies over startups.