Is the on-demand economy dying? - CNET

On-demand companies have defined this decade's tech boom. Ride-sharing companies like Uber and Lyft and delivery apps like Instacart have made patience an overrated virtue. They've also caught the attention of venture capitalists, who have poured more than $9 billion into those three companies alone.

But the recent troubles of several on-demand startups begs the question: Is this the end of the push-button economy?

"It's certainly a wake-up call for on-demand companies," said Matt Wong, a senior analyst at CB Insights, a venture capital research firm.

SpoonRocket was one of several startups -- Sprig, Munchery, Caviar -- targeting the food market, said Wong, who argues that failures should be expected in an intensely competitive market. Even so, investors aren't as willing as they used to be to throw cash at startups, he said.

After starting out last year by aggressively investing, venture capitalists sharply pulled back in the last three months of 2015, according to CB Insights data. The total amount they bet fell by 30 percent, dropping to $27.2 billion.

Less cash floating around means "a lot of those companies will be in trouble that haven't built a pathway to profitability," said Wong.

Some companies are already feeling the crunch.

Zirx was one of three valet parking apps competing for San Francisco drivers desperate to find a spot. But last month it said it was shutting down its parking valet service. Last summer, rival Carbon Valet shut down, leaving just one, Luxe.

And let's not forget Sidecar. Once a rival to giants Uber and Lyft, it dropped its ride-hailing and delivery business in December.

Jeff Grabow isn't calling these events good news. Grabow, who leads Est & Young's venture capital center in Silicon Valley, concedes, "We're in the midst of a pullback."