There are a lot of articles appearing now on the subject of a so-called "Series A" financing crunch, or dramatic reduction of early-stage institutional financing for consumer Internet companies.
What many people don't realize is that this is the normal process in the technology industry.
In a particular industry subsector, certain technologies will converge to create new opportunities. This in turn draws venture capital investment interest, as investors and entrepreneurs attempt to create market leadership from this new opportunity.
There are usually only a few winners and many losers, so over time the space becomes saturated with numerous "me too" companies that are undifferentiated.
As the opportunity plays itself out, at some point a critical mass of investors see the writing on the wall, pull back and refuse to continue making follow-on investments in high risk, low potential return startups.
Lastly, there is usually an overhang of technology that has been created as a result of this overinvestment and the winners usually are smart enough to pick up the pieces that can be incorporated into their offerings for continued market dominance.
This process plays out over and over across all ranges of technology industries, as the survival of the technologically most proficient is naturally selected for.
The venture capital-backed technology process is alive and well.