The Raging Battle Over the Startup 'Cash Crunch'

Can startups actually raise money? That is the question.

Image: iStockphoto

Ask national venture capital research firm CB Insights whether startups are having a more difficult time raising funds these days, and the answer you'll get is an emphatic: "Nope. Not even close."

In fact, according to CB Insights, angel and venture capital activity for early-stage companies jumped by 172 percent since January 2010.

That's in sharp contrast to last week's Wall Street Journal article, which claimed that financing for the average startup is drying up, and that valuations for growth companies are shrinking from a range of $6 million to $8 million to $3 million to $5 million.

So what gives? The Journal, CB Insights says in a post on its website today, got it wrong. "Dead wrong."

And, not to mince words, the research firm went on to say:

"The story was notably light on data (it was nonexistent), which is surprising since they (Dow Jones) supposedly track this data, but that's for another day."

So what happens now in what has become the hottest debate of the last five days?

Startups keep pitching, and firms, websites, and journalists keep tracking their success with investors, angels, and venture capitalists. In a sector as muddled as this, only one thing's certain: There is no clear-cut answer.

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