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Valley’s Venture Capitalists Are Souring on Uber-Style Startups

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Rafael Beltrami
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As of Monday, 30 on-demand startups had received early-stage funding this year, according to CB Insights, compared with 61 in the first six months of last year.With VCs clamoring for profits, on-demand startups must walk a fine line between alienating their customers by hiking prices and irritating investors by burning too much cash, says Tim Young, a general partner at Eniac Ventures.

Meanwhile, leading Valley incubator Y Combinator says fewer Uber for X startups are applying for spots, according to Jared Friedman, a partner there.None of this is to say that the on-demand concept is going away.

For example, a company like Doordash says that by batching orders together it can increase the number of food deliveries per hour.

Yes, such companies have managed to contract out the labor and pay no benefits.

Uber is big enough to afford large legal bills, including a settlement with drivers in California and Massachusetts last month that could reach $100 million.

The company could easily have gotten funding a year ago because it s well-run and has good metrics, one of the people said.Ali Vahabzadeh, Chariot s founder and chief executive officer, said his company isn t currently out fundraising but is instead focused on reaching profitability.

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Rafael Beltrami
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