Here are some candid observations with regards to funding scenario for the next 6 months (with inputs from several VC firms/startups we keep meeting often)
Expect a slow run when it comes to VCs funding, i.e. for Internet startups who solely rely on Internet for making money.
Apart from lack of innovation in business model, Internet companies’ (content portals/socionets) reliance on advertising model doesn’t excite VCs anymore (the sentiment is largely driven by failed fundings in 2006).
If your business is about making money on per transaction, you do have a choice (of VCs).
Many of the ‘platform’ products are having a difficult time in raising funds – at this stage, Investors are looking for players who can build the entire ecosystem (be it VAS or apps). But the good news is that 2009 elections will drive major revenues for mobile companies (and startups as well) – infact, the partnership breeze has already begun.
The New Color
So, what’s the new color we are talking about? Well, its Green – Call it herd mentality or pick a better name (if you want), VCs have suddenly started looking at Cleantech ventures as a far better option than funding advertising based models.
Infact, do expect more investments in these ventures (there are already a good number of investments that have happened so far) – but a lot of money reserved for funding Internet startups will be shifted to cleantech.
What’s your opinion?