Bubble 2.0?
It was a very interesting MoMo London this month. The theme was ‘Bubble 2.0′ asking whether we are entering a large investment cycle that will burst. A panel of venture capitalists, entrepreneurs and analysts gave their views on the current investment market. In the spirit of Mobile Monday, panelists were keen to stress that they were expressing their personal views. Consequently, I won’t quote people in this post.
Insights from MoMo…
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It doesn’t take much capital to create a mobile company. It fact, it’s usually much less than a VC has (and wants) to offer. It costs a similar amount to evaluate ideas (’due diligence’) irrespective of the capital amount required. Also, a VC wants projects where it can put a lot in so it can realise a larger gain on exit.
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From the technical aspect, with new data tariffs having become available, data costs are less important than they were a year ago. User experience has become more important.
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Any idea involving network operators as gatekeeper is considered very high risk.
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The management team is more important than the idea. It’s currently hard to find teams capable of succeeding.
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The following areas were mentioned as ripe for exploitation: Ticketing, couponing, marketing, dual mode, convergence, infrastructure, user experience.
I have healthy scepticism of VC funding in that I have seen too many (mainly non-mobile) companies steer in strange directions and ultimately fail. I think many mobile entrepreneurs share my scepticism. Also, most partners, including VCs, often want to see something before they will invest. Hence the current trend to evolve new ideas in ’stealth’ mode with very little capital.
I see the other side of low capital startups. Almost weekly, people approach me for advice and ask if I’ll do unpaid work in exchange for equity. I always decline. While I can assess and advise on the technical aspects I am lost as to know how good they will be at selling/marketing their idea. The MoMo consensus that the management team is more important than the idea makes me even more cautious in this respect.