Is the money drying up for startups, or not?

20 Oct

The Wall Street Journal reported today that web startups are facing a crisis of cash crunch. Depending on the anecdotal evidence of this emerging trend, the report said that strains that have started just, shows startups seeking money.

In Silicon Valley, money has been overwhelming into web startups. But now some investors and entrepreneurs say it is getting harder to raise money. Some entrepreneurs are turning to bridge financing or are beginning to accept lower valuations in exchange for funding.

The subject  ignited a debate in the Twittersphere among a number of angel investors. Some agree that there has been a slight fall in valuations, but there is enormous cash available and it isn’t clear if the small or the large deals are being affected the most.

There obtain excess fund for most of the market, but early-stage companies are courageous enough to run into headwinds, the journal said. The report added that the the emerging trends are similar to that of the late 1990s, like the dot-com boom turned into a bust. The journal also quoted the third quarter report from the National Venture Capital Association. the report said that venture fund raising fell to its lowest quarterly level in eight years.

The major reason for the fall is unclear, though it could be the feeble worldwide economy, a hindrance in innovation, a slowdown in the cycle for web based startups, or the fears of Wall Street finally having secret investors in Silicon Valley.

Source: venturebeat

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