Venture Capital Has Not "Dried Up"
"Long Tail" author Chris Anderson today wrote a WSJ piece called The Economics of Giving It Away, arguing that most online businesses can no longer succeed if CPM-based ads are their only revenue stream. I agree, which is why we at peHUB offer both Premium Subscriptions and host various events (like the Shindigs). But I do take issue with one line in Anderson's piece, in which he says: For the first time since 2001, the overall tide of investment and advertising won't rise. Indeed, it will almost certainly fall. Venture capital has dried up... It is true that venture capital activity has slowed down, but to say it has "dried up" is a massive overstatement. In fact, it's closer to a canard. Venture capitalists funded 833 U.S.-based companies in Q4 2008, for a total of $5.47 billion. That's well off the $8.08 billion invested in Q4 2007, but it's hardly "dried up." In fact, it's pretty close to where the VC market was at the end of 2005, when just $5.79 billion was invested in 810 companies. Moreover, not a single quarter in 2004 even broke the $5 billion mark.
