In this keynote session, Mathew Ingram talks with Dr. Paul Kedrosky to discuss about venture capital and web 2.0.
- Dr. Paul says it feels like we're in the bubble again but there seems to be too much hype.
- He sees the same business plans over and over - "It is like Flickr but for videos", "YouTube like services"
- There is as much venture capital as before but it is now concentrated in the best firms.
- The best firms always fish from the best pond and other VC's are trying to find the best scrap.
- Don't take Venture Capital if you don't have to. The problem right now is there are too many companies that don't need money that asks for money and there are too many companies that think they don't need money when they really do.
- The cost of entering a business is very low now but on the downside,whenever there's an opportunity there are 30 companies jumping in.
- YouTube seems like how television will be in the future so there maybe a lot more potential despite not having a strong business model currently.
- Ingram: Can you start a company with no business plan and develop the model afterwards? Absolutely. The best example is Google.
- The most interesting companies I've seen are ones with a subscriber model and harnessing collective intellegence. One of these companies is DabbleDB
- Another example of a profitable community centric companies is "Plenty of Fish" (dating service).
- Every place in the world thinks they have a seed financing gap. But Canada in particular, there's a lack of VC's to fill in the gap. Further, with a budget of $250 million, they aren't interested in making $250,000 investments because it would result in having too many companies to manage. They rather work with larger but fewer number of companies.
- There are too many companies that are built around features instead of products but every one is at fault including VC's, and even large companies.
- VC's really don't know what will be the hottest market. They only know what is currently hot so are typically trend or herd followers.
- There's a preoccupation with AdSense. It's great to see people make money with it but it is very risky.
- There's a lot of advertising dollars spent online but it is a mere drop in the bucket of the total dollars in North America.
- Canada's venture capital problem is like a chicken and egg problem except there's not enough chicken or eggs. There needs to be more companies with successful exit strategies so that it will create more interested VC's and future entrepreneurs.
- Venture firms are becoming more creative in terms of structuring deals because there are more ways now to exit and companies are requiring less and less funds to start up.
- VC's knows that income statements and how you spend the money will be wrong but they value the task of having a plan for moving forward or contingencies.
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