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Venture-capital funding for startups dropped 25% in the first quarter of 2016, the steepest decline since the dot-com bust in the early 2000s, according to new data from Dow Jones VentureSource.
A total of $13.9 billion flowed into US startups in the first quarter, but only 884 deals were done – the lowest number in four years.
The report is really focused on the traditional VC market. It includes only startups with at least one venture-backed round, and ignores startups backed only by private individuals – such as angel investors – so very early-stage startups are excluded. It also excludes companies that are majority owned by another company or by a private-equity firm.
Even so, it’s more evidence that the cold wind is definitely blowing through Silicon Valley. As companies find it hard to raise money, they’ll have to get to positive cash flow sooner – that means real customers paying more money than the startup is spending.