Is the Economy Affecting Startup Funding?

There was an interesting article in the Wall Street Journal Friday about whether the economy is having an impact on funding for startups. Now the on-line Journal is still a paid area, but if you have access to the paper, the article is titled In Silicon Valley, Start-Ups Begin Hitting the Brakes.

Now one of the premises is that if you are out raising money now, you might want to up your raise a bit in case there is downturn to tide you over. It also said that if you weren’t planning on raising money, maybe you should in case there is a downturn and funding dries up.

I think it is pretty clear that if your startup or plans are to target the financial industry, you might want to re-think your business. The sub-prime fiasco has slammed this industry and will continue to ripple for the foreseeable future.

On the other hand, the rest of the economy is doing fine. Now there might be some jitters or concern that the ripple will spread, but before you get caught up, consider fact versus supposition.

Entrepreneurs working in non-finance sectors might want to take advantage of investors concerns and look to get some of those funds they are probably trying hard to place before the downturn hits.

Hopefully, there won’t be a panic with thoughts of another bubble-burst. Things just aren’t adding up the way they did in the late ’90’s.


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