Breaking Analysis: Medium-size Tech Tsunami Provokes Global Warming in Venture Capital

SiliconANGLE Founder John Furrier joined Kristin Feledy on the Morning NewsDesk Show to provide insight on his post from this morning, “The Global Warming of Venture Capital – the Series A Cliff.” Furrier gave some background as to what inspired his post. First, he said that over the past few years, there has been a trend in Silicon Valley where the influence of major venture capital firms, who were controlling most of the money, has melted; hence the global warming metaphor. He went on to say that this has confused people’s views in terms of the economy. People think there’s a desperate depression coming in the tech industry because in the investment community, many start-ups are failing to obtain follow-on financing. They have begun to view this as an economic issue. But in reality, Furrier said, this is not a big issue because the majority of those companies should not have funding for follow-on venture capital in the first place, mainly because now that there’s access to open source, mobile and cloud computing technologies, it’s a lot easier to start a business. He said we’re seeing a massive tsunami of middle-class start-ups that don’t need venture capital.

Furrier reminded viewers that he predicted this trend based on his own personal experience in venture capital and from watching what other entrepreneurs have done with a mere bootstrap capital of $50,000 or $100,000. They were able to turn that money into a big business, primarily because their cost to acquire technology was zero dollars and almost next to nothing for hosting. He said, “With the application economy, the iTunes economy, the Google economy – there’s a lot of opportunities for people to actually build a viable business, and that is going to really make the web thrive . . . it’s a real economic indicator of a boom, not a bust.” He clarified that the “global warming” metaphor is referring to the melting of the big peaks of control from the big money holders, and going forward, we can expect to see fewer big deals and a lot more medium-sized deals happening.

In another story, a post written by Anil Dash last week about the “so-called lost web” has been garnering a lot of feedback and comments from tech insiders. Our News Desk Editor Kristen Nicole flagged it to Furrier’s attention. Furrier elaborated on what the post was about, saying there’s a whole new generation of people coming aboard the internet and mobile web, effectively creating an entire new user base. This generation has different expectations and they really don’t understand the history of how we got to where we are today with the web. He said a lot of open source values were created and Anil Dash pointed out that those same values are at risk right now. Mark Andreesen made the comment, “That’s just capitalism.” Furrier said the key point is the mix between capital and values.

In a follow-up post on Reuters, Felix Salmon talked about capitalism breaking the web. Furrier expanded on this, saying that the most disruptive ventures come out of nowhere, and they typically generate huge value, thereby breaking the web or breaking the status quo. He interpreted Andreesen’s comment as saying that in order to win big, entrepreneurs need to break things in a good way, and then make them better and create value.  See the entire segment with Kristin Feledy and John Furrier on the Morning NewsDesk Show.