The new environment is pushing some Internet companies to retreat completely from fundraising, said venture capitalists and entrepreneurs. "The bar is higher now," said David Sze, an investor at Greylock Partners. "We're looking at a lot of companies and doing little to none of them [as investments]. Many of them go away and don't raise at all."

One start-up that recently drew back from raising money is image-discovery website Piccsy, part of Groundwave Media Group. Piccsy CEO Daniel Eckler said he spoke to around 40 Silicon Valley and New York investors this summer.

Yet no investors bit with many preferring to "wait and see" how Piccsy fares with consumers after a planned website redesign next month, said Mr. Eckler. "I thought there would be more substantial interest than there was," said the 27-year-old, who is based in Toronto and who initially funded Piccsy out of profits he reaped from a prior start-up. Mr. Eckler said he recently introduced advertising to his site as a way to recoup some costs.

I think it scares Silicon Valley investors even more if the company isn't in the Bay area.

But yes, across 106 Miles I can confirm that many, many startups have experienced similar things.