The effects of the current state of the economy on consumers is well known. Higher prices on gas, food, and many other products and services have hindered consumer spending. The economic crunch has an impact in another area that is less noticeable to consumers but can have a significantly negative effect on our economy. That area is innovation.
Entrepreneurs rely on funding from venture capitalists and other financial sources to support their efforts to bring new products or services to market. But, a slow economy and uncertain credit markets have prompted these financial entities to pull back on their investments. As a result, budding businesses will have more difficulty raising money to take their ventures to the next level. Consumers will ultimately suffer as great innovations that lack funding to take it to the broader market will take longer to reach market, if they reach market at all.
Link: The New York Times – “Credit Crisis Spreads a Pall over Silicon Valley”