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December 2, 2008 10:38:49 AM CST

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Startups in Silicon Valley Tighten Belts

Posted Feb 15, 08 10:16 AM CST in Technology 

(Newser) – Companies in Silicon Valley are slowing spending and stockpiling funds to prepare for a possible recession, with many startups raising safety-net cash from investors. Venture capitalists, who raised more funds last year than any year since 2001, continue investing, reports the Wall Street Journal, despite a recent survey that found their confidence in the region at a four-year low.

Concerns include corporations cutting their tech budgets, reducing the market for the Valley’s wares, and spending less on the Internet ads that are many online businesses’ bread and butter. So far, most startups have avoided sales drops or layoffs, though some sectors—like real estate companies and those that sell to the financial-services industry—are suffering more than others.

Source Wall Street Journal

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Katy Harper uses a wireless connection on her laptop at a Chicago cafe in this Feb. 17, 2006, file photo. Meraki Networks Inc., a Silicon Valley startup, is promising to blanket San Francisco with free...   (Associated Press)
Matthew Stinchcomb (left) from online crafts-store Etsy discusses the DIY inspired start-up while Make's Phil Torrone (right) looks on at an event at Etsy Labs on March 22, 2007.   (Wikimedia Commons)
"My guess is that we'll start to see [corporate] tech budgets, and advertising budgets, flatten or decline," said one venture capitalist in Lexington, Mass. "Obviously that would have a ripple-down effect...   (Shutterstock.com)
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recession • Internet advertising • Silicon Valley • venture capital • startup • budget cuts


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