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Arthur T Knackerbracket has found the following story:

Things were different in Silicon Valley in the distant year of 2012, when iPhone sales were skyrocketing and you could still buy a house in Palo Alto for less than $2 million. Back then, most restaurants had menus, not tasting menus. Chief executive officers could say something grandiose at a tech conference without worrying about getting mocked on HBO six months later by the Beavis and Butt-head guy. And a talented entrepreneur could walk into a venture capitalist's office, say his startup was a mobile-first solution for pretty much any problem (payments! photos! blogging!), and walk out with a good-size seed investment. "That pitch was enough to get going," says Roelof Botha, a partner with VC firm Sequoia Capital. "It's not enough anymore."

Botha should know. Over the past five years he's been one of Silicon Valley's most successful investors, thanks to early bets on such companies as Instagram, Tumblr, and Square, all successes owed to the mass adoption of smartphones. Now, though, smartphone growth rates are near zero in the U.S. and falling around the world. And while there are candidates to succeed the iPhone as the next revolutionary computing platform (wearable gadgets, virtual reality), none has made a compelling must-have argument to the mainstream.

That means fewer opportunities for entrepreneurs, at least in the short term. The Bloomberg U.S. Startups Barometer—an index that considers capital raised and number of deals, first financings, and successful acquisitions or initial public offerings—remains high by historical standards but has fallen 21 percent since November 2015.

Earlier this year, One Kings Lane, the online home goods retailer once worth almost $1 billion, sold itself to Bed Bath & Beyond, one of the companies it was supposed to displace, for just $12 million. Jawbone, the maker of sleek wearable fitness hardware once seen as a threat to Apple's, has seen its value fall 50 percent. Since 2015, researcher CB Insights has counted 80 "down rounds," instances of a startup accepting a reduced valuation to raise more venture funding. "There was this fog hanging over Silicon Valley in 2001," says Botha, referring to the last big tech bust. "And there's a fog hanging over it now. There's no underlying wave of growth."

Startups' struggles to grow and woo venture capitalists are only half the story, though, because the VCs themselves are more flush than ever. With global interest rates low, Silicon Valley remains a safe-looking diversification strategy for investors, especially wealthy Middle Easterners and Russians with little regard for rates of return. These investors have poured money into new funds raised by the likes of Andreessen Horowitz and Kleiner Perkins Caufield & Byers. (Bloomberg LP, which owns Bloomberg Businessweek, is an investor in Andreessen Horowitz.)

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