///What venture capitalists are looking for

What venture capitalists are looking for

The article “5 Myths of Web 2.0” by The Drama 2.0 Show explains it best:

Even if the cost of building Web 2.0 products is cheap, effectively distributing them in the marketplace is a significant challenge because of the competition… Proponents of the notion that Web 2.0 businesses are cheap to build fail to distinguish the difference between the costs of building the product and building a viable company around a product.

So, even though you have spent a serious number of hours in your dorm room perfecting your “next big idea”, chances are that’s not enough. There are many ways to get funding, but the most high profile way to do it is by pitching to any of the top venture capitalists. That’s where the big money is, despite the chance of hopefuls actually getting funded being a dismal 1%.

Erick Schonfeld of TechCrunch recently talked to some VC partners to ask what they like to see when startups pitch their ideas. Essentially, it’s all about “structural change”. The partners say you’ll get a batter chance of getting funded if your idea relates to and takes advantage of:

  • Ascent of the mobile web
  • Merging of cyberspace and real space
  • The decline of the firm and the rise of one-to-one commerce
  • Unified identity (across different sites and services)
  • Generational shift (to a more tech-savvy user base)
  • Global growth of the web
  • Atomization of content
  • Hyper-targeting of advertising
  • The coming of human-friendly interfaces
  • Cloud computing

Does your idea fit this checklist? Well, good for you.

A caveat: what they don’t say, of course, is that you also need to have the right connections to even be considered, much less taken seriously. Then again, that’s how it is with most things in this world. I dream of a Web 3.0 that doesn’t need VCs (or at least, not much), where ideas can be readily deployed in the open, and the people decide on their merits and usefulness. The end-users choose, not the gatekeepers.

2010-05-19T22:02:11+00:00 June 27th, 2008|Internet Marketing|2 Comments

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  1. Affordable Web Promotion February 9, 2009 at 1:22 PM

    Interesting post. I think the biggest money for the future is in the mobile industry. Cell phone is something that everyone has with them all the time. If you can successfully market to the cellphone users, you will make gold.

  2. Mark Bowden August 25, 2009 at 5:25 AM

    Excellent post and very thought provoking.

    A huge growth area at the moment is this lazer targerted marketing through your very own web tv show, just pick a niche and go for it.


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