Will Investment in start-ups continue to fall?

Investment in start-up companies fell across the US last quarter as venture capitalists stepped back…

The decrease sent total VC investment to its lowest point since 2005, coincidentally was the year that marked the beginning of the “web 2.0” craze which led to a revival of excitement around internet companies in Silicon Valley, the world’s leading venture capital hub. Since then, we are starting to see other internet companies sprouting up across the U.S.

According to Dow Jones VentureSource, in spite of the economic slowdown we still have a healthy amount of investment, especially in the areas of  IT, energy, and business, consumer and retail. The last time start-up Investment plunged was in 2001 when the US economy entered a recession. That was when the bursting of the dotcom bubble wiped out overvalued tech stocks and left investors hesitant to fund new internet start-ups. However, situation is different this time. Most of the economic slowdown is related to the housing market and financial services sector. Therefore, some may conclude that the VC industry could be insulated from US economic weakness. Let’s hope so. Only time will tell.





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