Going Large with Social Infrastructure
Date: Friday , July 01, 2011
There is a vast difference in the investment focus followed by VC firms in India and the U.S. Today the U.S. market is hot for investments in software infrastructure, internet and media and the entrepreneurial interest in these segments is increasing more than ever. Internet not only connects users to various sites but it also connects people to one another. With distribution enablement through social media and word-of-mouth amplifications, it is possible to significantly reduce the cost of user acquisition and get scale fast. A number of startups are leveraging the social infrastructure, specifically social graph, to potentially disrupt traditional online businesses such as dating, eCommerce, travel and classified. The user scale and engagement when combined with the reduced cost of transaction, due to real identities and social visibility, provides a massive scope of opportunity on the new social Internet. Furthermore, social media represents discovery traffic with significant deferred monetization potential. Many companies are leveraging user connections and engaged followings on social media platforms to enable discovery and awareness marketing and advertisement. The aggregation and monetization of the discovery traffic is a significant opportunity in the near term.
Mobile: An exploding sector
The way I see mobile sector involving with local discovery and commerce, mobile social network, and mapping foot traffic pertaining to the service rendered to people in different ways, it surely have a lot of scope for expansion. The fast growth in smart phone adoption and the growing number of mobile internet users throughout the world provide a platform to leverage the sector for growth. The mobile infrastructure sector is also interesting and with increased areas of service, like delivering video, people have started depending more on mobile use than ever. The service provided by the higher-level user solution provided by mobile platform is a bigger opportunity where start-ups can gaze.
Core Technology: Hot Stuff
The core technology is one of the hot stuff to gain the attention of the VCs for funding, like IT Infrastructure, private cloud and public cloud and infrastructure component. Clouds are gaining more significance in nearly every sector, be it public or a private cloud. The cloud and the virtualization technologies are opening opportunities for startups to disrupt the way compute, storage and network resources are managed and delivered.
The maturity of the Internet as a platform and the growth of open source projects have essentially democratized entrepreneurship. The entrepreneurs are leveraging the outsourced infrastructure along with Internet based low cost distribution to test and refine business models and the successful models raise substantial venture capital to scale. The emergence of so called technology incubators and super angel investors has provided significant impetus to this trend which I feel is net positive for the eco-system. My advice to entrepreneurs is to avoid the “feature trap” and think about building large, scalable businesses because the market is very competitive and there is no such thing as an easy flip.