In response, institutional investors will do what they have always done: migrate to other sectors in which startups require substantial amounts of capital upfront.

At the moment, such sectors include green energy, robotics, medical devices, biotech, and military weapons -- to name just a few. (Try and launch a new medical-device startup without capital; it's not possible.)

In all likelihood, there will always be startup sectors that are starved of capital.

[UPDATE: Edited to correct poor grammar.]