Recently I was catching up with a buddy that I worked with about 10 years ago, we were comparing notes on some things that are very different now compared to our experience during the late 90’s. We quickly got to cloud computing and what a huge advantage is was not to have to burn tons of capital on gear to cover peak traffic. We both rattled off a dozen other things that make it incredibly more simple to start a business and how many wildly successful very small, efficient technology businesses are emerging. As usual, I like to throw Assembla into the mix at every opportunity because I think they’ve got something unique and valuable to add to the startup formula – basically, they’ve formulate a software as a service model for development environments.
Then, my friend said something that was different and got me thinking. He said, “The barriers to starting a new business have been greatly reduced across the board in the last decade. In fact, I’m starting to see some new problems. Think of it like a mature rain forest that has thrown off a ton of new seeds. At the forest floor, young seedling all look the same and struggle to get sun light. I’m starting to see more Venture Capitalist move down the time line and wait for opportunities with more mature entrepreneurs.” I wonder if the data backs up the theory that Venture Capital is transitioning to more mature companies now. And if so, is it because the cost of entry is so low that the market is flooded? Is it because folks are more risk adverse in a tight economy?