Despite huge deals, venture spigot could be shutting off soon

The UpTake: VCs are spending like there's no tomorrow on hot startups. But the public markets are looking soft for tech companies. It's an imbalance that can't last, leaving some to wonder when the flow of venture capital will dry up.

Private tech companies and their publicly traded brethren seem like they're playing under two different standards, and that can't last forever. Is an end coming to the high times in venture capital fundraising for New York's startups?

Each of the last two quarters, metro New York venture funding has reached levels unseen since the Dot Com boom, totalingmore than $2 billion in six months by one count. And there's little evidence any of this activity is subsiding this quarter, judging by the plethora of deals I've been covering in April.

Monday, Birchbox raised $60 million. Just the last week, Squarespace raised $40 million, Paperless Post raised $25 million and competitors LearnVest and Betterment announced deals on the same day (in part from the same venture firm) worth a combined $60 million. Each of those would have made Q1's Top Ten, and that's just New York companies; even bigger amountsare coming out west.

All this major equity financing has been playing out against an alarming backdrop:Plummeting valuations for publicly traded tech companies, as investors step away from giants such as Facebook, Yelp and Twitter. "It's a double standard," Seattle-based Marchex CEO Russell Horowitz told Bloomberg. His company's stock has dropped 17 percent while private startups on both coasts raise record sums.

And we know double standards won't last forever. Eventually, the factors driving investors away from the public markets will come to the private markets, unless quarterly earnings reports change the trend in the public stocks quickly. "I think it has some peoples' attention, that the markets are jittery and there are some macroeconomic factors that could lead to some ripples," Ed Zimmerman told me last week.

Zimmerman, chair of the tech group at Lowenstein Sandler LLP and an investor himself, was discussing the New York Times article from last week that highlighted companies taking money even when they appear to be on sound footing, a la Birchbox. But, as the consensus goes, it's smarter to raise money now than wait if you might have to keep growing the business through a down investment cycle — as David Pakman told Fortune over the weekend.

If a big squeeze is coming, Zimmerman said, he thinks it might hit in late summer: Right around August vacations and shortly before the September corridor, when memories are tuned to the recent history of calamitous and economic damaging events of that time frame. (Hurricane Sandy, 9/11 and Lehman Brothers, for instance.)

"Maybe it's superstition, but I'd feel good about having money in the bank on July 15," Zimmerman said. "Even a pending deal on July 15 could be OK. I'm not sure I'd want to be hanging out there looking on August 15."