Small Tech Companies Starve

Those companies aren't there anymore. The crucial center of the tech world -- new and fast-moving companies -- the meat in the technology sandwich -- is gone. Under the press of an economic slowdown, government regulations that have handcuffed entrepreneurs and venture capitalists -- and perhaps most of all, an administration that increasingly seems actively hostile to entrepreneurship and small business -- high tech is hollowing out.

It all still looks good -- the new cars in Silicon Valley traffic, the announcements of exciting new inventions -- but there is no there there. It is a comforting illusion, one that has us believing that good times are just around the corner, that the next Apples and Google are waiting in the wings to help restore the country to economic leadership and prosperity, and that Silicon Valley will once more become the generator of millions of new jobs across the land.

But it isn't true. Over the last couple months, I've seen some spectacular new start-up companies, some with finished products on the market. All of them are starving from lack of capital --and their business plans, which would have attracted tens of millions of dollars two years ago, earning only shrugs and apologies from straitened venture capitalists and banks. My guess is that several hundred new start-ups in Silicon Valley have already been lost, with no sign anywhere on the horizon.

If, as has been the case in the past, Silicon Valley and the tech industry are the leading indicators of the country's economic health, this is going to be a truly 'jobless recovery', one that rewards the few at the expense of the many in ways we haven't seen for decades, that consolidates power in Big Business at the expense of the little people, and which delays the adoption of important, life-saving, new inventions for years.

So much for 'Fair'.

Sometime soon, a hungry Washington is going to look to high tech as its last hope in restoring prosperity and employment to millions of Americans. It will see an enticing sandwich of opportunity …but when it bites down it will find only air.

This is the opinion of the columnist and in no way reflects the opinion of ABC News.

Michael S. Malone is one of the nation's best-known technology writers. He has covered Silicon Valley and high-tech for more than 25 years, beginning with the San Jose Mercury News as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, The Economist and Fortune, and for two years he was a columnist for The New York Times. He was editor of Forbes ASAP, the world's largest-circulation business-tech magazine, at the height of the dot-com boom. Malone is the author or co-author of a dozen books, notably the best-selling "Virtual Corporation." Malone has also hosted three public television interview series, and most recently co-produced the celebrated PBS miniseries on social entrepreneurs, "The New Heroes." He has been the "Silicon Insider" columnist since 2000.

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