There were two pieces in the Wall Street Journal last week on the subject of the US venture capital market losing momentum. First there was a piece about the widening gap between capital being invested and capital being raised.

And hot on the heels of this there was a piece about a possible ‘cash crunch’ saying that some of the momentum had come out of the market, that some start-ups were struggling to raise money and valuations were starting to come down.

I think the US market is cooling off a little and see this as a healthy and inevitable phase for it to go through.  Over the last few years the megatrends of cloud computing, social and mobile have jet-propelled the start-up scene and as a result more and more exciting companies have emerged that seemed to have the potential to really disrupt their industries. The trailblazers for this new generation are companies like Facebook, Zynga, Twitter,  Groupon, LinkedIn, Dropbox and Skype.

However, as sure as night follows day, a heated market will always be followed by an over-heated market. You know you’re in an over-heated market when valuations get so high it’s difficult to work out how they were calculated, more and copycat companies emerge and all start-up related costs go through the roof such as office space and salaries.

At the end of the day even an exciting and fast-growing market is ultimately finite – we only have a certain amount of money to spend. In all the excitement people sometimes forget this.

So things are cooling off a little but I see this as a natural correction in the cycle and I don’t expect there to be a dramatic fall in valuations and confidence – as I’ve said before I really don’t believe this is like the bubble of 2001. This new generation of companies are leveraging the three megatrends of mobile, social and cloud computing that are completely reshaping the technology landscape – and the largest ones are so much more mature with much more substantial revenues than was the case ten years ago.

This is a guest post by Jos White, a partner at Notion Capital for TechCrunch. This is in part a response to recent criticism of European VC by Datasift which raised money from US VCs.

All you ever hear about these days with European venture capital is either that it is miles behind the US or that it can contribute greatly to economic growth and should be subsidised by governments. While I mostly agree with both these statements I think they are missing the central point. By investing in early stage European technology companies you can make a lot of money if you get it right.

I don’t understand why people shy away from this. Perhaps people feel unable to make this case and quietly step around it. Or, in these austere times, maybe us Europeans feel uncomfortable being outspoken capitalists. Yet I feel strongly that the evolution of virtually any successful market anywhere in the world was fuelled by the opportunity to make money, and I don’t believe European VC is any different.

The European early stage investment market as a whole has under-performed over the last decade. I’d put this down to an over-supply of cash, spurred on by the success seen across the pond, combined with an immature start-up ecosystem, all leading to too much indiscriminate investing.

At the same time, I don’t believe that the European market is performing as badly as reports suggest. It’s too early to measure the performance of funds from around 2005 onwards and the data available for the industry in Europe is poor and unrepresentative due to less regulation and disclosure – estimates put the number of funds that are included in industry reports at less than 5% of the total market.

As a result of this real and perceived underperformance, combined with the worst recession for decades, there has been a Darwinian like culling of the European VC industry. According to the EVCA, the number of funds dropped from 1,600 in 1999 to 596 in 2009 and, out of those remaining funds, only 30% are considered active.

I look at raising money as a necessity for most fast-growing tech businesses. The truth is that generally you need to move faster in the world of technology than you do in most other industries and it is normally not possible to do this organically.

Raising money can help a business to accelerate its progress and take advantage of being early into a market. And it shouldn’t just provide an injection of cash, although this is clearly the main benefit – a good investor should also provide additional value to the business in terms of support, guidance and connections.

My advice when raising money is to raise more money than you need and also to raise it from the right people. Raising money is time consuming and financial projections are generally too optimistic and it’s for these reasons I’d try to raise more money than you think you need, assuming it’s available.

At MessageLabs we raised $30M from US based investors but only about half this amount was built into our ambitious expansion plans and associated cash projections – we didn’t know how we were going to use the rest of it but we were certainly pleased we took it when we did. We raised the money for MessageLabs in 2000, after only 18 months, but there was such momentum in the business and the   overall market for any Internet-based business that we were able to achieve a great valuation and choose from a long line of VC’s. It then turned out that it took a lot longer and cost more than we had expected to scale the business globally. One of the reasons for this was that we made our share of misteps along the way – one of which was an over-reliance on channel partners to sell the service that didn’t work so well when it comes to selling a SaaS service and another was that we needed to completely rethink the architecture of our service in the face of the huge growth in email volumes we were processing. But, most importantly, it’s just a reality of life that things generally take longer and cost more than you imagine they will.

A NESTA report published earlier this year correctly points out that the future prosperity of the UK depends on its ability to foster and support high growth businesses. It is these high growth businesses and the entrepreneurs behind them that are best positioned to take advantage of new business models and emerging technologies and markets. But, for these entrepreneurs to be successful, they need an accessible pool of capital willing to back their vision and support them over the long term. When running MessageLabs, I experienced firsthand the critical role VC can play in accelerating growth trajectory – very often in tech you just don’t have time for organic growth.

In 2009, there were over 1,093 venture-backed companies in the UK employing over 40,000 people.  From contribution to employment figures, to supporting all innovation that attracts further growth and further investment – there is ample evidence that proves the positive impact of VC funding.

I welcome initiatives that make it easier for investors to back promising entrepreneurs and believe that the government/regulators should balance their priorities to ensure that VC and its related knock on benefits to the economy do not suffer due to policy.

In the last year, the government has made some positive moves to support VC in the UK, most notably the announcement of the UK Innovation Fund, and the awarding of two new Enterprise Capital Funds (ECF’s); these steps are aimed at helping the supply side and allocating much needed capital to high potential start-ups.

I attended Seedcamp on Monday as one of the mentors and also to talk to the group about my experiences with being an entrepreneur and building MessageLabs. In a nutshell, Seedcamp is a funding and mentoring programme for start-up tech companies across Europe, Middle East and Africa. It’s run as a kind of competition (think American Idol for tech) where events are held across a number of major cities and from these 23 finalists are selected and assemble in London for an action packed week of mentoring sessions, presentations, workshops, drinks, etc. On the Thursday they all present in front of a panel of judges and a handful of winners are chosen. The winners receive around £50K in funding plus on-going mentoring and support together with all the brand benefits of being one of the chosen few. It was great to meet so many exciting start-ups in one day and hear about their hopes and dreams for the future. I think there were some really high quality prospects amongst the group that will go on to become successful businesses and it’s really fun to get to see near the start of their journeys.

I was impressed with the whole set-up at Seedcamp, which is testament to the great job Saul, Reshma and the team do to bring it all together. I was also struck by how the whole eco-system necessary to drive the success of young tech businesses was well represented, including VC’s, LP’s, entrepreneurs, media, subject-matter experts and of course the start-ups themselves. So all the Seedcamp winners are able to start laying the foundations of an eco-system around them that they will need, not just now, but over the coming years, to help sustain and accelerate their success. It’s precisely this eco-system, on a larger scale, that Europe needs to further develop and strengthen to compete with the US in terms of creating market leading tech businesses.

I believe there’s a revolution happening in the world of computing and communications that we haven’t seen since the rise of the PC in the 1990′s. This revolution can best be described as cloud computing. The broad concept of ‘cloud computing’ includes terms such as on-line services, software as a service and on-demand computing.

The cloud computing revolution means that more and more computing and communication resources are moving to the ‘cloud’ in the form of infrastructure, platforms, services and applications all of which used to be delivered through physical products or premises that we could actually see and touch. This new form of computing means that resources are residing in the cloud and are therefore available at any time and from anywhere, giving complete freedom of choice and mobility to the user.

In addition to enabling greater mobility there are numerous benefits to this new computing model including the lack of upfront costs; fixed monthly pricing covering all service, support and upgrades; quick and easy set-up; access to vast amounts of data that can be used to constantly fine tune and improve the service; and the ability to empower users by giving more people access to resources without the need for a PC on every desk. All the user needs is any device connected to the internet whether that is a PC, a tablet, a smartphone or a laptop and they can access their information, their services and their applications instantly.

This blog is about all aspects of the cloud computing revolution including the entrepreneurs, the leading players, the investors and the new trends and technologies. But most importantly, it will be about the emerging, fast-growing businesses that will play such an important part in this major transition – challenging the very foundations of the IT industry.