The economic downturn may actually be good for technology ventures, and there are reasons we won’t see a repeat of the crash of 2001, according to the industry website techradar.com. The situation today is very different from the tech bubble, when investors threw money at anything with .com without a sensible business model to back it up.
Entrepreneurs have learned their lessons and today know they have to produce real value and revenues. There’s less money sloshing around and it is being invested more strategically. It all means that venture capital continues to flow to tech companies that deserve the funds. LinkedIn, for example, has recently raised $22.7 million; online shopping website like.com has raised $32 million. Another difference is that many Web 2.0 companies are not going public. While they’re taking additional investments, there’s no stock issued so there’s no big run-up in the price of their stock.
The current economic climate could actually benefit start-ups, as they’re forced to run leaner and focus on revenues. There’s less competition during down times and more available talent. The article quotes Mark Zuckerberg, founder and CEO of Facebook, telling delegates at a recent Web conference in London:
“Traditionally, some of the best companies have been built in down economic times. Companies that have succeeded in providing clear value succeeded no matter what the economic conditions were. If you offer value to the end users, who are really what you’re building the service for, then that lasts.”
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