Fred Wilson: Soon, There May Again Be Enough Money to Fund Your Awful Startup Idea

Fred Wilson, reigning mandarin of the NYC startup scene and possessor of the world’s most unsettling favicon (see left!), is publicly floating the idea that the recession-induced contraction of venture capital markets might soon be over. We here at Geekosystem would like to break down what that means for you, the average citizen of the Internet!

For readers who don’t follow the startup world, the amount of money sloshing around the venture capital market tends (like most things the world, unless you are Francis Fukuyama) to follow a cycle, oscillating among:

1. Too little money, where even companies with astounding ideas die on the vine for lack of capital (See: Most of Human History, Farnsworth, Philo T.),
2. Just enough money, so that good companies get funded while would-be founders with awful ideas are sent packing from the offices of yet-penurious VC funds, and
3. Way too much money, where your business plan about “Hulu, except for snuff films” has seventeen MBAs in ill-fitting suits calling your cell phone daily and bidding each other down to take tinier and tinier slices of your company in exchange for a million-dollar check (See: irrational exuberance, Burn Rate)

But what does this mean for the bright-eyed hordes of coders spilling forth from our universities with dreams of reinventing the consumer internet? Or, more importantly, for youngsters with no useful technical skills whatsoever, who plan on spinning a major exit from dreams, toothy smiles, and elbow grease? Take it away, Fred:

2010 will be an interesting year. If VC investments go back up to $25bn to $30bn per year, then the diet didn’t stick and we are back to an overfunded industry that will produce subpar returns on average.

Why, it sounds like soon we’ll be rocketing from “too little” to “too much” so fast that our term sheets will suffer whiplash.

Take heart, young entrepreneurs – what’s bad for the VC industry is good for you. Even if you’re a clever young thing planning to start (in Carol Bartz’s words, not ours) “Used-F***ing-Golf-Balls.com,” there will soon be more than enough dumb money sloshing around the marketplace for you to do it!