[ffn]

If by small business you mean get-rich-quick schemes to con greedy / desperate investors, then tremendous damage has been done. If by small business, you mean a small group of individuals (or just one person) who have an idea and several free weekends / week-nights to implement that idea into a product then put it in front of potential users via sites like HN (if some sort of developer-centric product) or on a market-place like amazon or Taobao (if some sort of real product), then none at all.

The monetary cost of delivering most new products to users is pretty much at most $100 (the time cost hasn't changed though; it still takes forever to get really good at doing something). Which means, for the majority of small businesses, millions of investors dollars is next to useless to the expert owner when he or she can bootstrap him/herself to profitability without them. Sure, it might take 2 or 3 years longer, but the small business owner is also under no sleep-depriving pressure to go fast, and when one's runway is effectively infinite, one doesn't run out of it.

So to the DIY owner with plenty of professional skill, discipline, and patience, investor money (and the associated risk and burnout) just isn't attractive. Which leaves the venture investment field largely populated by impatient hot-shots peddling get-rich-quick schemes. And, having been burned time and time again, perhaps these investors would have learned by now.

[mlucero]

I think he was referring to the small businesses that actually used services like Groupon and LivingSocial to sell their products.

[barkingcat]

Small businesses as in the small restaurants and vendors who sold coupons through things like groupon or livingsocial.

It seems that these heavy discounts weren't really profitable and didn't bring back repeat customers, and many places sold multiple lifetimes of services (like at nail salons, etc) at a loss.