As everyone knows cash is king and during times of recession cash becomes king ,queen and the whole army. Most businesses usually keep reserves for just this type of period ,but what how would a startup do this as it does not have the cash reserves in place as yet and needs a constant flow of cash.

The most obvious would be to raise as much as possible and hope that you don’t crash and burn before the recession ends. Even though the advertising business is growing in the web world it is also becoming more tricky to make huge amounts of cash without being clever in how you present the advert to your customer base.

Many of the current hot web 2.0 startups are raising cash. I have taken this from venturebeat.com , you can read the rest of the article there.

Take widget-maker Slide, for example. The company hired well-connected investment bank Allen & Co. in December and rushed to raise $50 million at a $550 million valuation. Its executives flew out to New York right before Christmas to seal the deal with its private-equity backers, as Keith Rabois, Slide’s vice president of business development, tells me. They didn’t want to wait until the economy got worse (and pocketbooks thinner) in January.

Perhaps the biggest thriller here is Glam, the online media and ad network for women, which boldly planned to raise $200 million in equity and debt in August, but which it has yet to close. Things are clearly taking longer than expected, although the company says it has an announcement coming soon.

Here’s some data. Out of 379 IT-related funding rounds that happened in the fourth quarter of 2007, 129 were for web companies, according to Dow Jones VentureSource. From total of $3.7 billion in investments, nearly $1.1 billion went to these web companies. “It’s pretty impressive for that little [industry] segment”, Dow Jones’ Adam Wade tells me, noting that there have been more than 300 rounds raised already in January, a good portion of which have been web deals.

For more data points on the latest funding, take a look at the social networks. Facebook raised $240 million from Microsoft last October, then raised another $60 million from Hong Kong billionaire Li Ka-Shing in November, and an undisclosed amount from European entrepreneurs the Samwer brothers in January. Hi5, as well, just raised another $15 million in venture debt on top of a $20 million round last summer. Meanwhile, Bebo hired a bank last fall, and I hear it is looking both at selling and raising more money.

Seeing that I am busy with my startup, I am going to try to bootstrap it for as long as possible. I think VC funding will definitely slow down and VC’s will become more picky on what they want to invest in.

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