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According to the new data derived from multinational organization that checks trends in the funding and capitalism department, Dow Jones VentureSource, venture capital funding for startups have dropped 25% in the first quarter of 2016, the steepest decline since the dot-com bust in the early 2000s.
Although the report is only based on limited number of the start-ups, it is still an alarming trend that shows the delicate nature of the tech-bubble. The survey only included traditional VC markets, with at least one venture-backed round ignoring startups backed only by private individuals (such as angel investors) so very early stage startups are excluded.
The Real Picture
Is it really cold in Silicon Valley and the cash flow is running dry each day with lesser funding? It’s too early to form conclusive statements. However, the trend so far does seem to be falling that way. Since a significant part of Indian technology startups in India also receive their funding from American investors, this trend could jeopardize the future of technology in India as well.
Investors are suggesting its about time that start-ups look up for real cash from customers rather than just bouncing on the bubble investors gave them to sustain their operations. Drastic discounts and promotional schemes do not guarantee customers, and operations should focus on sustainable practices.
Recently, “Uber for Kids” shut down in USA for basically running out of money to keep it running. In India, Jabong has also allegedly dropped its price to USD100 million from USD1 billion after failing to find a buyer.
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