Venture Capital was a small world in the earlier period of venture funding. Large families like Rockefellers started their private funds through into highly risky ventures. The East coast and Boston was the center of venture investing largely Boston area near Route 128.
Georges Doriot is considered the father of Venture Capital and the American Research and Development Corporation was the early pioneers in the venture capital. DEC or Digital Equipment is the example of a venture funded firm that launched the computing age independent form larger firms like ATT and IBM.
The model moved west to Silicon Valley in a more open environment with Fairchild semiconductor and Intel came form. The treacherous eight were responsible for changing the valley of farms into Silicon Valley full of chips and computing powerhouse that is has become.
Intel in itself was key in the capital formations and professional venture capital investing and the most famous venture firms. Sequoia and KPCB are the most renowned firms that have developed and launched some of the biggest and most famous firms from Silicon Valley and in the nation. Apple, Amazon, Google, Netscape, and Google are just a few to name that have changed the world in terms how we live and consume.
Venture Capital was a very expensive game to play and very few have the skills and the money to take on huge risks. The risks amounted to tens of millions of dollars to support firms on their path towards the public market, if the were not acquired before.
The biggest change these days is change in costs involved in bringing firms to the market with new tech applications. Computing has evolved into a larger ecosystem that allows users to plug into in a simple manner. You need to just plugin a cloud and create new application using a large number of ready made tools for the most part. The incremental has become the norm in building a valuable app that does not need to be a large technological breakthrough. Largely most existing technologies are available and a simple app with user base is all that one needs to be successful.
Firms like Airbnb, Instagram, Twitter, Square, and Tumblr are great example of taking largely existing technology and developing a large user base for simple use of an application. The capital required is minimal is terms of traditional venture capital and considered too small and opportunities are too risky for the larger VC firms that provide expansion capital.
The game has moved towards angles and software. A new model of entrepreneurism is evolving where seed money plays a more important role in funding startups and innovation. The cost are low and speed is becoming fast in terms of funding and hitting the market just right timing. Social media has played a great role in terms of aggregating users and testing the market for what will stick. A larger number of starts up are filling up blogs and getting funding. Most will not last and being tested in a real time kitchen labs open to the market through the Internet. This is leading to a larger number access to market and funding sources by reaching out directly to consumers.
The App economy is where the market is being focused that is moves form desktop and mobile device directly to the consumer or user. Most of the funding these days is from angles and/or better termed entrepreneurs. Anglelist is a fine example for the marketplace for app and speed involved in funding process.
Direct to consumer model means less money is required and revenues require fewer dollars per users. Firms are profitable at an earlier stage and require less for expansion. Traditional VC that wait out for later rounds for more capital intensive are unable to participate in many of the funding requirements except larger firms needing to go public.
The barriers for new entrepreneurs and startups to enter the market have been leveled flat. Essentially, the market has gone global riding on software and platforms with little coding required than before. Stories have appears from ideas to launch from less than a year and under 25K.
The market is shifting towards small and faster firms with incremental technology advances. Technology has advanced in enabling others to plug together software on platforms for a specific application for users. This is allowing for an increase of the number of apps and speed to hit the market and for the winners. This has a self reinforcing force that will bring a number of new products and funding to the market ridding on ecosystem that has largely in place for other to capitalize.Categories : Tech
Tags : , Airbnb, App Economy, apple, entrepreneurs, Georges Doriot, instagram, Social networking, Square, Startups, Tumblr, twitter, Venture Capital