Executive founders at two prominent and fast-growing Pittsburgh-based startups shared candid remarks on how their companies are navigating current economic headwinds as part of a panel discussion following the release of an annual startup investment report.
Joe Hipsky, co-founder and chief strategy officer at fintech startup IRALOGIX Inc., and Graham Rihn, founder and CEO of waste tech firm RoadRunner Recycling Inc., outlined how their respective startups got to where they are today and how they've faced recent setbacks as part of an hour-long panel discussion at the Alloy 26 co-working space in Nova Place on the North Side.
Local seed-stage investment firm Innovation Works Inc. and the downtown office of Ernst & Young LLC hosted the discussion following the release of the two firms' joint annual investment report, which found that 150 Pittsburgh startups secured $1.029 billion in investment deals throughout 2022, up from the $894.3 million the local startup scene raised collectively in 2021. Both RoadRunner and IRALOGIX had raises that contributed to that figure last year, as RoadRunner raised a $70 million Series D in January 2022 followed by a $20 million extension round last November while IRALOGIX secured a $22 million Series C last July.
According to Hipsky, Pittsburgh seems to be insulated from many of the more extreme macro trends that have been seen across the tech sector nationally over the past few months, like widespread layoffs at major tech firms. But it's not immune, as he highlighted with his own personal experience following the recent collapse of Silicon Valley Bank (SVB), which appears to have only affected a small number of startups in the region.
"Watching SVB evaporate in 36 hours — where we had all of our money — was fun," Hipsky said in a sarcastic way. "We tried to get money out, we were unable to, we were too late. I wasn't really concerned — understanding the underlying reasons the bank went down — I wasn't really concerned if we were going to get our money back. [The concern] was just when it hit with payroll coming up."
Hipsky said he drafted 14 different versions of potential investor updates starting from the onset of SVB's collapse on a Thursday up until the announced decision that federal regulators would make all deposits at the bank whole again on a Sunday evening days later. By then, these drafted updates weren't even needed, Hipsky said.
"Come Sunday night, I ripped it up and threw it away because it didn't matter anymore," Hipsky said. "Then it was just four wires across three banks later and we made payroll."
While RoadRunner didn't see any direct impacts from SVB's collapse, Rihn shared that the startup has had its own series of setbacks over the past few months and since the pandemic's onset. In February, the downtown-based Roadrunner, which is in the process of moving to Lawrenceville, announced job cuts affecting nearly 10% of its staff, bringing its current employee count down to over 500 workers. At the time, Rihn cited "the current economic climate" and how it was causing the company to streamline its operations, which included issuing layoffs. It's a climate the company has weathered for many months, he said.
"In 2022, inflation had a very large impact on the waste industry so we had to battle that all year; mission-critical," Rihn said. "And then most recently, the markets are down but we were fortunate enough to get an extension of our Series D and a step up in valuation and not a step over, which I was very happy that we were able to do that."
