Be careful – The New Reality in Funding Land

I have seen a lot of dealflow recently. All kinds of Web and mobile hopefuls. Some good, most merely hopeful. What I am not seeing is a lot of money chasing these companies. I am also seeing a lot of dealflow in metals recycling, mining, industrial eco-chemicals, and they are at least seeing lookers. However, money is getting either scarce or wary.

My latest pitch to my clients centers around lean company tactics and bootstrapping if at all possible.

Here are three articles that pretty much sum it up:

Venture investors still have a healthy appetite for early-stage consumer Internet companies, but those startups are having a harder time raising follow-on financing.
Overall the amount invested in consumer information services was off 42% in the first nine months as the difficulties of newly public Internet companies such as Facebook and Zynga cast doubt on the business models and valuations of social media companies.
So what has changed in the past couple years? A lot, actually.
1) the consumer web has matured. we are almost 20 years into the consumer web and we have large platforms that are starting to suck up a lot of the oxygen. google, facebook/instagram, amazon, microsoft, apple, twitter, ebay, yahoo, AOL, craigslist, wordpress, linkedin together make up a huge amount of the time spent online, particularly in the english speaking world. there are still occasional new entrants into this list and departures too. tumblr and pinterest have risen a lot in the past couple years while myspace has declined. but consumer behaviors are starting to ossify on the web and it is harder than ever to build a large audience from a standing start. I’ve been hearing about the so-called Series A Crunch for at least six months,and in recent weeks, I’ve spoken with more than 20 venture capitalists, angel investors, incubator heads, lawyers, and other necessary cogs in the ecosystem trying to get some details about it. Everyone — to a person — says it’s a real phenomenon. And everyone gives the exact same explanation of why it’s happening.

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