The New York Times reported this morning that in the 2008 second quarter, European venture capital firms invested 35% less money in 42% fewer companies than in 2007's second quarter. This is an even more dramatic decrease than the one seen in U.S. venture capital, which declined 19% over the same period.

Short take-away: uh-oh. Venture capital is the lifeblood of start-ups, especially in industries with greater innovation, such as tech and biotech. Of course, this capital crunch is the unsurprising consequence of an economy in which flipping a young company for profit has become increasingly difficult. As the article reports, a paltry two venture capital-backed tech start-ups have gone public in the U.S. this year.

But, as (almost) always, there are upsides. The traditional start-up industries are taking a huge hit--the two hardest hit in Europe were, surprise surprise, information technology and health care. But other industries, namely information services and (surprise surprise) energy, are on the rise in terms of receiving venture capital.

Moreover, as venture capitalists are increasingly wary of plowing in substantial amounts as a company heads closer to a sale, that vacuum could open up an opportunity for smaller, first-stage financing. And what do you know? The 46% of European venture investments that went towards such financing was the highest such percentage since 2001. In sum, it has rarely been so difficult to sell your start-up, but it may be a little bit easier now to start it.