There’s still good news out there for software startups

The 2022 startup market might feel like a slowly unfolding train wreck, but there’s good news to be found — provided you are willing to take a longer-term perspective.

Sure, startup layoffs are spiking, venture capital is slowing, and the stock market is a hot mess. Underneath each drumbeat of negativity, however, there’s more positivity than you might expect. And, extracting one more nugget from the recent Battery Venture quarterly cloud update, the doomsayers are ignoring history.

So this fine weekend, let’s find the sunshine amid the clouds. Get it? Clouds. OK, no more SaaS dad jokes. To work:

Founders, here’s the good software news

The good news is a variation of the bad news and is often positive thanks to historical comparisons. Sure, this is good news of a sort, but it’s welcome all the same:

• The Bad News: Startup layoffs are spiking.
• The Good News: Far less than in early 2020.

As Homebrew’s Hunter Walk noted recently on his personal blog, startup layoffs hit a local maximum last month, reaching 16,000 and change, per the Layoffs.FYI tracker. Given that the same data service recorded effectively zero startup layoffs during the Q3-Q4 venture boom, the figure is bad. But! It’s also far less bad than the damage startups endured in early 2020.

For example, startup layoffs reached nearly 10,000 in March 2020. And then for months, they stayed hot, with more than 25,000 recorded in both April and May of the same year. Just 70 individual startup layoff events were noted by Layoffs.FYI in May 2022, far fewer than the more than 100 per month recorded from March through May 2020.

Things are worse than they were in late 2021 from a startup staffing cut perspective, but we’re hardly setting records here, even looking just at recent data.

• The Bad News: Venture capital is slowing.
• The Good News: From historically record levels.