As many of you may have noticed, the Internet has become a hot commodity in the local high tech ecosystem over the last year. After five or six years of drought, we are suddenly awash in interesting Internet companies. We screen dozens of Internet companies a month here and meet with a large percentage of those. We have put in place flexible investment models, ranging from traditional Round A investments to "lab-style" seed-stage financing.
We have a dedicated Internet team seeking out the best of the bunch. But what exactly constitutes the best?
Regarding this question, we are still working on our investment thesis. We have come up with a few things we like to see in an Internet company:
- An understanding of (and passion for) the Internet - This is not as trivial as you might think. Unlike with other high-tech sectors (think semiconductors or enterprise software) everybody thinks they know the Internet. But in the last year and a half of actively living and breathing this industry I have learned that it's not that simple. You need to understand the Internet from within, understand how the value chains work, and how people use the Web today.
- A product/service that provides a clear value proposition - This can be a whole host of things from a new way to consume media, to a service that helps migrate offline activities online, to a product that serves the unmet needs of a specific vertical.
- A solid revenue model - One of the biggest differences between Bubble 1.0 and Bubble 2.0 is the existence of proven revenue models. If you have a product that can be monetized a number of different ways (for instance, some combination of advertising revenues, subscriptions, and e-commerce potential) then all the better.
- Knowing how to market and monetize your product - This ties into points one and three. The Internet financial ecosystem is far more complex than it seems at first. We look for entrepreneurs who can navigate through the world of SEO/SEM, viral marketing, affiliate programs, advertising networks, etc. etc. etc.
- Understand the importance of good UI - Going back to the first point again. The key to success in the Internet world is getting and retaining users. The key to doing the former is providing a clear value proposition. The key to the latter is good user interface.
These are pretty much the basic "must haves". More on our investment thesis as it develops. In the meantime, if you have a startup and you're looking for funding (or even advice and input) you can email me here.
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