The economic crunch inevitably will have an affect on the funding of start ups. This is causing many start ups to look at expenses and to look at revenue generation. These two areas can either undercut the growth of the company or turbo charge it by unveiling opportunities that would have remained hidden. The NY Times has an article by Brad Stone and Claire Cain Miller called Credit Crisis Spreads a Pall Over Silicon Valley which talks about some of the sentiment felt in the unofficial capital of innovation – silicon valley. Here are some quotes from the piece:
“Funding will tighten up. We are certainly going to see some ripple
effects,” said Ron Conway, a prominent venture capitalist who has
invested in hundreds of Web start-ups over the last decade.
Start-ups that have less than six months of cash in the bank “better
reduce costs,” Mr. Conway said. “I will certainly be advising my
companies to do that.”
“When I woke up on Monday morning I was pretty happy to have our
fund-raising behind us,” said Jason Devitt, the company’s founder.
“This week, I received a slew of e-mail congratulating us on raising
money in this economy. Clearly there’s a real awareness of the impact.”
Mr. Abrams said. “Few companies sound like they are breaking new
ground. It’s like, ‘Here is Twitter for dogs.’ And people still think
they are going to get rich by being a blogger.”
“It seems to me like the industry is still in denial,” he said.
Doom and gloom are two adjectives to describe many writers themes over the past month or so, but I have to disagree on the subject of Start Ups. The foundation for newer technology offerings are there. Much of the current focus is on social this and social that. That is what shaped the second generation of the internet. But people didn’t stop going to parties and bars. So there is something still ethereal out there that the internet can tap into. The right VC will see these opportunities and won’t panic.