The whole US economy was in a bubble. Because of profitable investments in the housing market, made on faulty assumptions, and cash the mortgage owners had, the

The whole US economy was in a bubble. Because of profitable investments in the housing market, made on faulty assumptions, and cash the mortgage owners had, there was a huge amount of cash circulating. It was profitable to invest in startups because investors knew that consumers were spending a sizable chunk of their cash on frivolities; the startup had a higher likelihood of income. Moreover, an increase in domestic demand means a buoyancy in the stock market; investors knew they could in future sell on these shares at a profit. Simply, investing in startups was a great idea. Now banks issue fewer mortgages, after their faulty reasoning came back to haunt them, and current mortgage owners can't pay back their mortgages. Not only this, but, because banks have had to write off large swathes of their bad debts, they're less willing to lend money full stop. This hits domestic demand badly. Relates to startups, the profitability of startups has taken a hit at their prima facie and stock market value: a decrease in domestic demand means customers purchase fewer frivolities, and a decrease in demand always badly hits the stock market. Not only are startups less profitable, but VC have less cash. VCs that invested heavily in the stock market, and particularly the housing market, now have much less cash than they had 4 months ago. Perhaps whoever's bought redux has seen some über filtering mechanism that will change the internet. But my point is that whoever's bought them has very likely far less cash to splash out on potentially rewarding, but less so because of a decrease in domestic demand, filtering mechanisms. This all indicates that we are either at the bubble's apex or we are seeing its deflation. So, will investment dry up? I'd say not completely, but VC are going to be a hell of a lot more discerning in future, especially if they've invested heavily in the housing market, or stock market in general; they have less money to spend, ergo risk on startups.