Are IT startups dead?

There's been a sharp decline in money available from venture capitalists to fuel new technology, according to the New York Times. Where would Facebook, Twitter and so many other IT initiatives be without money from these sources?

A report from PricewaterhouseCoopers and the National Venture Capital Association released last week finds an alarming trend: Venture capitalists invested the lowest amount in technology companies since 1997.

Some investment advisers think that's a good trend because there was too much money in the system. Do you? Here are the numbers from the report:

In 2009, venture capitalists invested $17.7 billion in 2,795 start-ups--37 percent less cash and 30 percent fewer deals than in 2008. Internet companies took a big hit as investment declined 39 percent.

There was only one exception: Twitter, which raised $100 million, one of the 10 biggest venture deals on '09.

But there were many more negative signs. Silver Spring Networks, which sells energy-efficiency technology to utilities, lost more than 50 percent of its investments. And that's just one example.

It's no surprise that it was a bad year. Venture capitalists stumbled badly with the economic downturn that started in Q3 '08 like everyone else did. Predictions are that this decline will continue in 2010.

For more on the decline in venture capital:
- see this New York Times article
- see this WSJ article
- see this CNN article

Related Articles:
Shrinking venture capital deals impact IT
Number of Venture IT deals drops to 10-year low 
Startups feel the squeeze