Saturday, September 10, 2011

The 'next Facebook' will be a crowdfunding platform

The leading social network service is ... Facebook.
The leading micro-blogging service is ... Twitter.
What's the 800 lb gorilla in online services for startups? ... There isn't one.

There is no one place 'everybody' goes online for startups.  And thus:
  • You can't access a 3rd party app market and related APIs.
  • There is no 'search' for startups.
  • There is no central ecosystem for all the related players (office rentals, IP lawyers, accountants, benefits companies, employees, ...)
  • There is no way to apply deep quantitative models and trend analytics to startups.
  • And of course, as a consequence, much of the startup market remains opaque and difficult to access.
And yet, think about how huge the small business ecosystem is.  American "informal investors" put approximately $51 billion into early companies in 2010 alone (business angels, only $9.4 billion of that).  But it's the size of the entire ecosystem around small companies that really drives the value of being a "Facebook of startups" -- and that's going to be an order of magnitude bigger.

So what happens when across the global scene (or some fraction of it), trillions of dollars worth of ecosystem start focusing its time on one (or a few) winners in the online startup space?  And when players access related apps from a marketplace, find employees, employers, lawyers, administrative services, office space, designers, etc?  Investors will find a rich ecosystem equally valuable and transformational, given that large data sets of info will enable trend analytics and custom deal potential identification.  Do you suppose that will make a 'Facebook' of the space valuable?

I've had a conversation with a number of VCs about a crowdfunding platform being the next major investment potential.  Mostly they just politely change the subject, or even roll their eyes.  Reminds me of trying to get funded in the 90's for a virtualization startup (doh!).  Well, I'm going all-in on perhaps my biggest ever trend call.  The next Facebook-sized investment opportunity in software startups, is a crowdfunding platform.  And it's going to have an app market & APIs.  Roll your eyes all you want, sheople.  It's about to get interesting...

P.S. It's worth noting the momentum picking up in regulatory changes for crowdfunding.


dgf said...

Sometimes, if you build it they will come. I was moved by one comment in your post:"There is no central ecosystem for all the related players (office rentals, IP lawyers, accountants, benefits companies, employees, ...)"
well, I am a CPA and actually love helping the start-up. it always comes down to can they pay the fee, etc. Same for the Lawyers. So, can professionals offer some form of guidance that allows the Start-up to start, and gets the professional a "reasonable"fee for the help. Some group approach to the issue. I am obviously only posting this to start the germination of an idea. I don't know its form. I am only expressing an idea. For instance, what if we brought a few CPA's and Lawyers in the same room with the start-ups and try to come up with a solution. You know, collaborate to conclusion. I might try it here in Nevada County, CA... soon.

Anonymous said...

This article holds the solution to not only America's stagnant economic growth but to the whole world. Those from the "Old" School of economics wouldn't understand it. Invest in small biz = fire up the economy = create real sustainable jobs. Not just lip service like payroll tax cuts, BS! partner with new innovators