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Tech Start-Ups: The Economy's Best Hope

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Silicon Valley has never been a place where people throw in the towel. The dot-com crash of 2000 didn't drain the life out of the tech start-up culture -- in fact, it probably helped by injecting a dose of realism and weeding out dumb ideas and pretenders who had no business starting anything. And thank God for that, because in the years after 9/11, technology from start-ups and innovations from existing companies like Apple helped pull the country back to life.

So now, in the wake of the financial crisis, news reports say venture capital investment is falling off - which, at first, looks mighty worrisome. Is investment money going to dry up, leading to a drop in tech start-ups and a dearth of companies to help the U.S. rebound? Not necessarily.

VCs are important to Silicon Valley, but they're not the only source of money for start-ups anymore. The cost of starting a tech company has dropped precipitously, thanks to cheaper/better/faster technology. A company that five years ago cost $1 million to launch now might cost $100,000. And that makes it easier for angel investors -- wealthy individuals -- to fund companies. Marc Andreessen and his business partner Ben Horowitz have been steadily funding about a start-up a month. It's also easier than ever for a few ambitious technologists to pool their own resources and start a tech company on a shoestring.

Read the whole story at CN Portfolio