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CNET News Video: Daily Debrief: Wait, didn't they say tech start-ups were toast?

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CNET News Video: Daily Debrief: Wait, didn't they say tech start-ups were toast?

4:41 /

Believe it or not, many early-stage tech start-ups continue to receive funding. This is one of the worst economic climates in recent history. What's more, many technology companies say they are hiring. How to explain the apparent contradiction? Check out the CNET News Daily Debrief with Charles Cooper and Webware Editor in Chief Rafe Needleman.

[ Music ] >>In the counter intuitive files we have a doozy of a story to talk about today. Welcome to the CNET news daily debrief I'm Charlie Cooper here with my colleague from Webware, Rafe Needleman. The conventional wisdom is that things are going to hell in a hand basket. There's a market meltdown. Tech start up's no way, no how will get funding. That's not the case. >>Rafe Needleman: It's not and it's surprising me. I've seen companies now getting funded. But the companies that are getting funded are the companies that are very, very early stage. The companies for which there is no future for the next couple of years. >>Charlie Cooper: We're talking basically software >>Rafe Needleman: Software, web services, things like that. Companies that are investing in building a product that they're not gonna release until two or three years down the line from now. These are the perfect companies to start today because there is no market. There are no customers, you know, credit's tightening and people have less to spend so it's a great time to hunker down, build a company that you're not gonna be able to sell the product of for another couple of years. And those are the little companies that are getting early stage C funding. >>Charlie Cooper: And which of these C's are actually ponying up? There has been a pull back a few weeks ago for now famous email caution from Sagoya Capital to it's clients to hunker down because things are rough. >>Rafe Needleman: Well the VC's that are sending that message most strongly are the ones that are later stage investors. The ones B stage or C stage. Now as companies get bigger and more advanced they need more money and they also get closer to the exits to an IPO or an acquisition since those IPO's are shut down for a while and M&A is slowing down so since the exits are closed the companies now that are ready to exit, to make a lot of money for their investors and return that money to their capitol, to the VC's and to their partners, those are the companies that now have to extend. Those are the companies that really have to pull back. >>Charlie Cooper: I'm sorry >>Rafe Needleman: But the early stage companies and the ones for whom the investor's are C stage funds and early stage funds, they have a different perspective. >>Charlie Cooper: There have been any number of layoffs and probably will continue for the foreseeable future, however you've pulled together something you call the spreadsheet of sunshine. >>Rafe Needleman: That's right, yea >>Charlie Cooper: Again, counter intuitive, companies are hiring. >>Rafe Needleman: Yes they are. Intel has 1,000 openings, REM has openings, Facebook as a lot of openings. I put together two spreadsheets. I started this project because I put together a spreadsheet of tracking the layoffs and there are about 36, 38 companies in that spreadsheet as we're speaking right now and last night I was so bummed out by that that I put together a different spreadsheet, companies that are hiring. And I just asked my readers, you know, if you know a company is hiring send me their careers page right now. And within very shortly I'm gonna have more entries in that spreadsheet than the companies that are laying off. >>Charlie Cooper: Well, you heard it here. If you have any information you want to send it to Rafe@ >>Rafe Needleman: CNET.com, yea put it in. >> Charlie Cooper: Rafe@CNET.com. So in the interest of public journalism here if there's anybody out there unfortunate enough to have lost his or her job, rules of the road to get them through this temporary squall. Because again the computer industry is based upon innovation and no downturn lasts forever. There will be a better day sooner or later. >>Rafe Needleman: Yea, well, it is tough times and people are going to lose their jobs. But there are other jobs to be had. There are also projects to pick up on, you can go to something like oDesk which is a project site and pick up piece work. I think it's a great time to get involved in Open Source. In fact, one of the reasons that Open Source is so powerful right now is because of the last downturn. People who needed things to do and if it didn't pay immediately went and developed projects that they thought the world needed and those became the Open Source powerhouses. So getting involved in Open Source, picking up projects, the obvious things updating your profile, saying that you're now available. What else do we have? Oh yes, start up fairs, I mean, there's a lot of companies who are still starting up. Any time you see a company pitching their new business they are hiring or will be soon if they're not right now. So, there's a lot of opportunity around. It is going to be tough. There's going to be redistribution of employment. But I don't think that qualified people will be unable to get work. I don't think it's going to be that bad. I believe that to be the case. >>Charlie Cooper: And you can find the full text of Rafe's story. It's up on our website at www.CNETnews.com. On behalf of Rafe Needleman and the CNET [Background music] news daily debrief. This is Charlie Cooper. [ Music ]

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