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Crazy, crazy funding for a web startup

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Just like a bad habit or a reality TV-like guilty pleasure, over the past few weeks I have grown accustomed to check out startup-related blog TC once a day just to see what’s popping around the web. It’s been exciting times for a while on the web now, the late nineties bubble is well forgotten, and a massive wave of very useful and profitable services based on the Internet are here with even more on the way.

That’s not to say there aren’t crappy ideas and lots of copycats popping up as well, all of which are usually covered by TC, but that’s just part of the nature of a fast growing industry. There seems to be a lot of excitement from investors as well, so demand for more potentially viable businesses is quite latent despite of recession concerns in the US. But something that quite shocked me this last week, and that’s what I wanted to share today, was the announcement of a $15M funding for blog widget ShareThis.

Now, I won’t call it undeserving because it’s a very cool widget that works quite well with many blogging platforms, and I may even implement it here at some point, but for a widget that has a very limited scope and has yet to come up with a way to make any money, that’s a huge figure that will rarely become justified.

Revisiting some of my thoughts from last year, I don’t want to scream it’s an Internet bubble all over again. For starters, the web today is already a hard proven medium that is competing hand in hand with television and newspapers. Also, for an Internet-based business like TechSpot, a second dot com bubble on top of an imminent US recession would just be terrible, terrible news.

But once again I wanted to raise a red flag regarding stuff like this that in my opinion poisons somewhat the realistic scenario of where the web stands today and where it will belong a few years from now. If for a moment I thought investors should know better, I will think again.

Edit: I just realized that the post title “Crazy, crazy funding for a web startup” could imply saying that $15M is too much money for ANY web startup, which is by far not the case, not does that reflect my thinking. What I meant was, too much money for THIS specific startup.

Written by Julio Franco

March 16th, 2008 at 1:27 am