Could VC be a Casualty of the Recession?

The shift in what is funded is no surprise by now. The only questions are 1)if the new bio/green tech startups will be successful, and what the role for VC will be in other sectors and 2)What will happen to the current crop of VC firms now? As flattering as it is that funding in VC has remained constant, is it still a wise investment?

I don't know what the answer to these questions are, but they're the ones that stick in my mind. On a positive note, at least one stressful part of the Internet startup process is in decline.

Any business relying on network effects is going to need upfront cash. Since these types of business tend to become the fund-making "homeruns", I think VCs will stick around, doing what they are best at - chasing the big hit.

I agreed with much of this article, but not that line. A lot more people have heard of YCombinator since a year ago, so all else equal, you'd expect applications to rise over that period. So comparing the number of apps with the corresponding value from a year ago isn't a fair comparison.

Indeed, looking at http://siteanalytics.compete.com/ycombinator.com/?metric=uv we see that the number of unique visitors to ycombinator.com is up 3x from a year ago. But applications are only up 40%. To be fair, we probably can't expect applications to grow 3x since many of those visitors are international, or otherwise unlikely to apply to YC. But to make the statement pg wants to make, I think we need a better metric than raw growth in applications.