File this one under is it wishful thinking or is it a real trend?.
One swallow does not a summer make, but consider this:
- Someone I was meeting with yesterday said that they were winding down their venture fund because they had incurred heavy losses and concluded that they needed to stay closer to their knitting.
- John Bennett makes the point in his blog that Cloud Computing offers unprecendented opportunities for small- and medium-sized businesses (SMBs).
What does this have to do with Venture Capital?
- Cloud computing makes it possible for startups to go after a niche SMB markets of the type John outlines.
- Such a startup may not have the infinite potential of a Google or Facebook, but making a $20-50M company out of a $1-2M investment is pretty nice returns, even for a VC.
- Seed-stage venture firms such as Launch-Capital have come into the market with a different model — and done well even in this economy. Their model is different in that they make more small-dollar deals rather than fewer large-dollar deals.
Might other VC firms go the same way? Your thoughts?
Follow on Twitter
