Keeping the Horse Ahead of the Carriage
Over the past few years, we’ve all caught the SquawkBox reports declaring the acquisition conquests of the big boys. For example, News Corp buying MySpace for $580 million, or the $1.65 billion pocket change purchase of YouTube by Google.
A recent article at Knowledge@Wharton explored what is most valuable when building a company -- through the eyes of the entrepreneur as well as the VCs looking for a place to call home for their money (even if only temporarily). What investors are looking for now is new business ideas and not just new technology, which in the past was a key part of any new venture.
PriceWaterhouseCoopers' Money Tree survey revealed that Q1’07 venture funding was $7.1 billion, the highest level since the Q4’01. Of that total, Internet-specific companies reaped $1.3 billion - the highest level in five years.
No, no need to check your calendars or the news - the dot.com era has not returned. But what we have embarked on is another market trend: a shift in the way technology is used and valued. Everyone has heard the old adage, “If it ain’t broke, don’t fix it.” Well, it seems more and more people are catching on to the significance of using what has already been developed. Depending on usage, it is possible to teach old dogs new tricks. That’s the beauty of new ideas. They allow the user, or the entrepreneur, or the investor for that matter, to look at something with a new set of eyes.
What’s the value in that? If you ask me, it’s priceless.
And contrary to what some folks may want to believe, the glorious “exit” of the stars often requires another kind of investment: time. That’s the only way to build a truly sustainable business model, one that will deliver results.
At the 2007 AlwaysOn Stanford Summit, Roger McNamee, co-founder of VC-firm Elevation Partners, agreed that a longer-term view is required. He said, "If you're an entrepreneur, just do the things to make your company more valuable and be prepared to do it for a while."
Alleluia. There’s hope yet.
