Start-ups worried after 1,000-point stock market drop

An electronic display shows information about the stock market in Times Square, New York, Monday, Aug. 24, 2015. World stock markets plunged on Monday after China's main index sank 8.5 percent — its biggest drop since the early days of the global financial crisis — amid deepening fears over the health of the world's second-largest economy. (AP Photo/Seth Wenig)

SAN FRANCISCO (KRON) —  U.S. stocks saw an unprecedented 1,000-point drop for a time Monday in the second volatile day on markets around the globe.

KRON4’s Kate Cagle explains why some start-ups are worried, and why investors are holding on to their wallets.

Start-ups need cash all the time. Some new companies only have enough money for three or six months at a time. If investors get skittish, it could have a ripple effect.

“The problem with running a start-up is that you never have enough cash,” said Steven Hoffman, who is the founder of Founders Space.

Hoffman, also known as Captain Hoff, knows a lot about running a start-up. He helps start-up companies all around the world. And Monday’s giant market swing has him a bit spooked.

“I lived through the bubble burst and the financial collapse of 2008, and if it happens again, it won’t be fun,” Hoffman said. “I won’t be excited about it. ”

Hoffman warns it may be time for some companies to trim the fat and look at their long-term strategy, especially if funding from venture capitalists get’s tight–just like it did in 2008.

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