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Tech heaven or hell?

• Rory Cellan-Jones
• 21 Jan 08, 14:18 GMT

In my very first post on this blog, way back on New Year鈥檚 Eve 2007, I wondered whether we were seeing another bubble in technology stocks and, if so, whether it might burst in 2008. Now I鈥檓 hearing two things at once 鈥� a lot of excited noise about a whole rash of start-ups, coupled with the sound of air escaping from that bubble.

So into my e-mail this morning drops a note about a company called , offering customers the chance to start their own online shops - 鈥渁n interesting concept that's already taking off in France and the US, and is now coming to the UK".

It boasts backing from the venture capital firm that put money into Skype. So one reason to be cheerful - new web ventures are forming and finding VC backing.

Another sign of the continuing buzz around web 2.0 businesses comes in the results of the Crunchies 鈥� the awards for start-ups sponsored by the leading technology blogs and .

The predictable overall winner was Facebook - but the awards give a useful feel for what is exciting technology investors right now.

So - the latest in a whole raft of online video sharing sites, and another to promise 鈥減remium content鈥� - is named best video start-up. - whose environmentally friendly sports car is released later this year - is the best clean tech start-up.

- the mobile social network that many of us already find annoying rather than addictive - gets the best mobile start-up award. And the best international start-up is - a personal web portal reinventing what so many of the big internet players tried and failed to achieve a decade ago and doing it much better.

But just as the blushing winners step forward and accept their Crunchies, the world鈥檚 stock markets are going into meltdown again.

The darker mood that infected many financial stocks in the second half of 2007 left technology shares virtually untouched - but in 2008 they have succumbed to the general gloom.

In late December, Google was somewhere around $700, and Apple was breaking through the $200 mark. Three weeks on, Google is back to $600, Apple to $160. And one of Britain鈥檚 top technology stocks ARM, maker of the chips that go into smart mobiles like the iPhone, has fallen more than 30% in two months, despite the absence of any bad news.

But why does this matter to the start-ups? Because the venture capitalists who back them have always got an eye on the exit, recouping their investment by selling up to stock market investors. Back in 1999, every bright young dot com was rushing to float, with the IPO exit door providing healthy piles of cash for them and their backers. But in 2000, that door closed, and very soon the supply of venture capital dried up.

Now the market has turned, it will get a lot harder to make that journey to IPO heaven. Mark Zuckerberg of Facebook - and his backers at Microsoft - may never see that $15 billion valuation put on the infant business last autumn turned into hard cash. And the inventors of the next Hulu or Netvibes may find that 2008 is not the greatest year to do that elevator pitch for a venture capitalist.