Start-ups may fall victim to global market slump

Small high-tech start-up companies could be the early victims of sliding Nasdaq prices according to industry expert, Robin Bloor.

He claimed the "choppy market conditions" caused by recent economic turmoil in Russia and Latin America means investors are cautious about investing in technology start-ups.

Instead, investors could play it safe by opting for shares in established companies such as IBM and Microsoft, he said.

"We have been sitting at the top of a very rapid investment rise that has now been blown out. All that's happened is that the market has lost what it gained for the last six months. However, there has been a split in investment leading to a drag in the new business area," he said.

However, whether this is just another trend or a permanent feature in the markets has yet to be proven, according to Bloor. He said the test of the market climate will be the flotation of Geocities in a few weeks time.

"The chopping could be a precursor to a big dip, so if it continues the confidence [in investment] will go. Geocities will be a reasonable straw in the wind. If it bombs, it means investors are cautious. It will be a certain sort of flushing out of investors."

But Bob Jones, technology entrepreneur and analyst at Schroeder investment house, claimed technology companies are still a good investment. "What we have is a very volatile market, but generally, growth is still strong and the overall trend is upwards."