Startups feel the squeeze

Venture capital is scarce, the market for initial public offerings is weak and the stock market is very shaky. All of these factors add up to trouble for innovative new companies, many of which are running low on cash. BusinessWeek.com cites the example of Gajus Worthington, the chief executive of Silicon Valley's Fluidigm, who was set out to take his chip maker public about a month ago. On Sept. 5, Worthington gave a standing-room-only presentation to investors interested in buying Fluidigm stock.

After Lehman Brothers filed for bankruptcy and the financial meltdown began, he withdrew his IPO."You could smell the fear," he said. "It was a black hole of anxiety."

Now, Fluidigm is in the same position as many promising startups.

"It's a high-stakes gamble that's being played out at thousands of startups across the country. The crop of innovative companies that venture investors helped build in recent years now finds that they can't go public or even sell out in an acquisition,'' reports BusinessWeek.com. Some venture-backed companies are starting to close their doors. Recently the music site Social.FM and travel planner TripHub have closed their websites.

"In the next six months you'll see a lot of companies go down," said Ted Wang, a lawyer at Silicon Valley's Fenwick & West who works with emerging companies and venture firms.

For more on the growing pain of startups:
 - see this BusinessWeek.com article

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Report: VC start-up money shrinks