Fred Wilson of Union Square Ventures argues that the rules for technology investment have changed. He says that the the rules are changing, the business is changing, and we need to change with it. Code is commodity - Data is proprietary is an important point, and the table below from his presentation summarizes the difference in perspectives betwen the past and now:
Fund Sizes $250mm to $1bn TO $100mm to $400mm
Markets Large Horizontal TO Smaller Vertical
Product Focus Technical Problem TO Business Problem
Technology Critical To Success TO Enabler
Data By-product TO Core Value
Differentiation Technical Approach TO Suitability,
Effectiveness,Efficiency
Capital Requirements $30-50M TO $5-15M
Typical Exit Values $250-500M TO $50-150M
Valuation Metric Technology Position TO Revenue/Earnings Multiple
The full presentation is available here.
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