I wonder how much of this supposed non-investment in "Web 2.0" companies is because traditional VC's like KP can't get the terms they need (or are used to)?
In the 90's to start even a web-based company, you would spend $1MM+ just on things like office furniture and snacks.
These days a $500,000 investment can get you a working "beta" prototype with users (or even paying subscribers) and much more infrastructure than it ever could in the past.
You can get your "Web 2.0" company rolling with less than a dozen people, in temporary (or no) office space. That doesn't need "Kleiner Perkins" level investments, so I can see why they maybe can't find any Web 2.0 deals worth investing in.
When $500,000 gives you something that you can start to make logical extrapolations from, you're in a better position to negotiate a lower percentage for the investors. This is good for founders, but not for VCs.
In the 90's to start even a web-based company, you would spend $1MM+ just on things like office furniture and snacks.
These days a $500,000 investment can get you a working "beta" prototype with users (or even paying subscribers) and much more infrastructure than it ever could in the past.
You can get your "Web 2.0" company rolling with less than a dozen people, in temporary (or no) office space. That doesn't need "Kleiner Perkins" level investments, so I can see why they maybe can't find any Web 2.0 deals worth investing in.
When $500,000 gives you something that you can start to make logical extrapolations from, you're in a better position to negotiate a lower percentage for the investors. This is good for founders, but not for VCs.