Three investment heavyweights speaking today at the Interactive Local Media/SES Local conference in Los Angeles said the environment for funding is still attractive for early stage companies. However, the credit crunch looming over the market since August is having an impact on leveraged transactions for later stage companies.

Nick Veronis, managing director at Veronis Suhler Stevenson, said, “There will be a pullback on later stage companies coming on the market.”

Overall, investors said their valuation methods are pretty old school, even as they look at Web 2.0 companies. This stands in contrast to how investors approached new businesses a decade ago.

Veronis says his company, which is a late stage investor, focuses on cash flow, while also considering other factors, including growth and opportunities for consolidation.

Kara Nortman, vice president of M&A at IAC, described her company as “a value-oriented investor. We look at cash flow. Maybe not in year one, but in years two and three. If there is no cash flow we cannot justify acquisitions.”

None of the investors seemed to have much use for the idea of using value per unique users as a valuation metric.

Mark Gorenberg, a partner at the VC firm Hummer Winblad Venture Parners, said some companies suffer from getting funded too early in their development.

“I actually think it is healthy for entrepreneurs to start out with no money, to see if they can get to the next level.”