Startup Activity to Increase

OK, you heard it here first (most likely not), but I have a prediction to make:

More people will decide to start their own tech company as the economy continues to go South!

Large companies aren’t a safe haven, especially with the big financial institutions have a bit of a rough time.  The automakers are experiencing massive declines in sales.  Small businesses will be hurt if the overall credit cruch continues and banks start pulling their lines of credit, which if that happens would be disaster for everyone.

So where is a smart and ambitious individual to turn?  Startups.  That is my prediction anyway.  Thankfully, there are a number of key factors that will positively impact this:

1. Open Source Software – No startup should be paying licenses for databases, server software, etc!
2. The Cloud – Amazon Web Services (note – they are sponsoring our upcoming Networking / Demo event on Oct 22nd), Google, SUN Microsystem; all are offering cloud services which allow a business to scale their site / service quickly and cheaply. (comparison of different services)
3. Cheap labor – As the unemployment rate goes up, the available of highly qualified professionals that can help you build your business will be asking for less compensation than they normally would
4. Revenue Models – There are now revenue models (at least potentially) that can support a small targeted site, unlike during the previous downturn in the market; Advertising, Freemium, eCommerce, Enterprise sales, Consumer services, etc.

Obviously, it won’t be easy, but if they can get going and get through and survive to when the economy turns around, then who knows how successful they can be.  For instance, many of the companies we interviewed following the dot.com crash are still around and doing very well.