Is the party really over?

Today Peter Kafka from Silicon Alley Insider writes “Sorry, Startups: Party’s Over“.  Is he right or is he wrong?

He certainly isn’t alone in pushing doom and gloom.  Eric Eldon’s story on Venture Beat titled “Sequoia has emergency meeting, tells startups to try to survive downturn” the day before.  On the same day, Michael Arrington’s post on the same day was titled “Angel Investor Ron Conway Emails His Portfolio Companies Over Financial Meltown”.  Both of these guys support Peter’s hyped up headline.

If you take what all of these guys are saying into account then you would have no doubt that the time has arrived to close the garage door and go back to work.  We have all seen evidence of the market contracting, but that doesn’t mean the world is going to end.

Angel investors are definitely keeping their hands in their own pockets, so now is definitely not the time to be out looking for their help.  That much is true.  But morale is still high.

If you look around there are plenty of startups that are still hiring and on the move.  I received and email today from a Northern Virginia based startup company that is gearing up for launch and looking for more people to help make that happen.  Consider a few more examples:

Baltimore area based Lotame just garnered $13 million in series B funding.

My former colleagues who left Freewebs to start appsavvy just accepted $3.1 million in series A funding. 

Twitter raised $15 million a few months ago.

So did *clearspring ($18 million) just a few months ago.

Historically speaking, companies have been known to buck the trend and succeed during tough economic cycles.  Paypal is a great example of that.  Something else to remember is that despite the speed bump that is in place right now, there are other variables to consider.  For example, we’ve got a new President that coming in Q1 2008 and overall investment numbers for the year are at or near par with last year’s numbers.

So the bottom line is that now is the time for startup founders to lighten their load and perhaps hold off on those shoot for the stars projects, but not time to throw their hands in the air.

If you have run out of angel investors and venture capital funds to talk to, here’s a new list to check out: The Funded.  Along the way you can rate the ones you have dealt with.  Enjoy!