Another way to think about this is that if capital is scarce, people would have to get more intimate with customers and also innovate significantly to be able to create value. So, it should mean the success of another set of startups and entrepreneurs, and hopefully this set would not be toasting incoming valuations and unicorn status, but either of profitability and IPO or exit valuations.

Early round investment is angel, later rounds are corporations. Not all companies will need the later round funding which dominates headlines (e.g. Twitters $200m funding) so are less likely to need to corporate backing.Government support is obviously limited so I would expect it to gradually reduce proportionally as the sector matures getting government investment generally means you have not been able to attract angel investment. Government money is probably also easier to acquire, so this speaks to the challenge - whereas VCs in the US will have a better knowledge of the track record, signs to look for etc, hence be more likely to reject.Theres also arguments to suggest Silicon Valley might be overcrowded with people looking for funding.

The opening quarter of the year 2016 has demonstrated a significant uplift in terms of deal volume as well as total investment activity. The upsurge is clearly evident and a clear dissection of the same, further, translates into a growing elevation towards the positive sentiment encompassing the Indian startup horizon. Xeler8 has been tracking the investment deals (including incubations and acquisitions) since Jan 01, 2016 to understand the real term deal scenario in the country. According to the data compiled and analysed by Xeler8 in the first quarter of 2016, Indian startups have raised US $ 1.73 billion across 344 deals from 312 investors. On an average, we have seen at least 4 startup fundings per day between January to March 2016. This growing confidence of investors to bet high on the early stage ventures has put more responsibility on the startups to strive for best in class efforts to scale and further improve their business models. While the cumulative deal value to early stage startup ventures has remained low as against large size deals at growth stage, a cursory glance to the ecosystem through the lens of a number of startups has been truly appreciated even while the investment amount has taken a hit.

There definitely seems to be some fear or apprehension among investors in entrepreneurs & startups that valuations have gotten ahead of themselves, and that at least some startups valuations are too rich to sustain. Those companies whose valuations are too rich to sustain will either need to raise more cash in a down round, or conserve their cash, or else run out of cash and go out of business. Naturally that skepticism and apprehension will filter down to early stage investors, as well. Smart investors would rather buy in at a cheaper valuation than a pricier one.

This might be true, but look at the brighter side of it, this means there is less competition when you get funded, and this means it will likely be easier to hire people, and you will not have to pay as much, and rent will be likely be cheaper due to the lack of competition, so your money will last longer, and you will have a better chance of success. So, maybe the valuation is lower, and will take you longer to raise your funding, but you may end up better off. Easy money can be a curse while tough money (money thats hard to get) can be a blessing in disguise.