VC is working its way to irrelevance, due to the "no man's land" around $150-500k of initial funding. This is, uncomfortably, the order of magnitude which can give a serious start to a promising idea: 2-4 peoples' salaries, plus operating expenses, for 12-18 months.
Investors seem to either want to put up small amounts (~$20k) that equate to mere weeks of living expenses, or make multimillion dollar investments, forcing a company both to give up an unreasonable share of its equity and to grow more rapidly than most tech companies are ready for (just try adding 6 new programmers to a 2-person project). By having a blind spot inconveniently placed right at the amount that most startups need, investors are pricing themselves out of relevance.
Given this undesirable arrangement, the reason startups exist at all is that most tech people usually have some savings after being employees for a few years, and during good economies, it's so ridiculously easy for a talented programmer to get a decently well-paying job that no one's worried about risking some savings by working for equity and deferred pay-- e.g. quite possibly for free-- on a cool idea. If the economy continues to sour and the ease of finding a good job is no longer the case, startups will have a much tougher time finding people to work pre-funding, and if investors aren't willing to meet startups on their needs, there will be fewer of them.
One major trend (and a positive one, in my mind) that I'm going to call in the startup world is that many, many more startups in the 2010s will be starting in smart, low-COL locations such as Minneapolis, Madison, and Portland.
Investors seem to either want to put up small amounts (~$20k) that equate to mere weeks of living expenses, or make multimillion dollar investments, forcing a company both to give up an unreasonable share of its equity and to grow more rapidly than most tech companies are ready for (just try adding 6 new programmers to a 2-person project). By having a blind spot inconveniently placed right at the amount that most startups need, investors are pricing themselves out of relevance.
Given this undesirable arrangement, the reason startups exist at all is that most tech people usually have some savings after being employees for a few years, and during good economies, it's so ridiculously easy for a talented programmer to get a decently well-paying job that no one's worried about risking some savings by working for equity and deferred pay-- e.g. quite possibly for free-- on a cool idea. If the economy continues to sour and the ease of finding a good job is no longer the case, startups will have a much tougher time finding people to work pre-funding, and if investors aren't willing to meet startups on their needs, there will be fewer of them.
One major trend (and a positive one, in my mind) that I'm going to call in the startup world is that many, many more startups in the 2010s will be starting in smart, low-COL locations such as Minneapolis, Madison, and Portland.