Digg founder Kevin Rose said that while cash is rare these days the climate is right for launching Internet startups.

He said that those getting financing will find fewer competitors and that there will be more media attention focused on young technology firms. Speaking to the Web 2.0 Summit in San Francisco, Rose said that it is a great time to do something new.

However, he admitted that funding for consumer-oriented Web companies is going away and there will be a lot of opportunities out there. He pointed out that the top social Websites such as Digg, Facebook, and Flickr launched in 2004 when it was a "tough time" to get funding for Websites geared to Internet surfers.

The way to be an Internet entrepreneur in the difficult times is to keep your  day job and work at night and on weekends. Rose said that using cheaper developers in far out places is also a good idea and renting servers.