Can web services startups do without a VC?
No great startup month
Apparently there are no interesting startups this summer month (of 2008) as Scobleizer “complains” in his blog post.
This view is shared and explained by Rafe Needleman of CNET in his remarks:
1) There are 2 important events coming up (DemoFall and TechCrunch50), that restrict entrepreneurs from launching.
These events holds the best companies in PR hell, as they can’t talk to the press if they want a shot at being on stage at either of these events (which does bring PR and venture capital attention).
2) Developing and launching a web service has become more accessible than before at a much lover cost.
3) VC’s are putting money in solutions that are expensive to build as the low budget startups don’t need them and avoid them. These high investment risks will not necessarily bring a good return.
Expensive solutions like renewable energy, transportation, health care.
4) As it is easier to get funding for bad ideas, there is less pressure to define great products.
VC’s becoming obsolete for web services?
Maybe web service startups are no longer interested in VC’s for different reasons:
- The Internet can open access to wide audience without high marketing expenses.
- Viral marketing can work in some cases.
- Content rules on the Internet: that can be written with much effort by the founders or by spending VC money.
- In B2B to marketing costs are less than in B2C.
Maybe VC’s are becoming obsolete for web services and web things?
What is the added value of a VC in web services?
Can a VC bring:
- Marketing: Leads?
- Sales: customers? Probably not or very limited (their other investment companies)
- Technology access? Maybe, maybe not.
- Customer support? Not.
- Management experience access and advice? Probably.
- Operational experience? Yes for the non-technical operations
- General & Administration? Yes, but these functions you hire externally.
- Overhead? VC can create additional overhead.
How about your startup?
