Uncommon Wisdom

Nov 14 2008   2:40PM GMT

Regarding the fate of VC-funded web businesses

Tom Nolle Tom Nolle Profile: Tom Nolle

Analysts and venture capitalists (VCs) are joining forces to warn that the days of running a web business for years with no revenue are over. The latest round, generated by Gartner, is aimed at the social media players who are the latest in the net-company crowd to get funded and are still largely unprofitable. We believe that the whole venture process is tainted by hype-based promotions that border on pyramid swindles, so winding back in VC investment will likely have little real impact on the market. However, it will certainly have an impact on employment in Silicon Valley and elsewhere, and there may be a period when even good startup ideas have little access to capital, especially in the first half of 2009.

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