2009 Venture Trends

US Software and IT

Michael K. Madison
Managing Director
Cocoon Ventures
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2009 US Software Trends and Gaps

Economic Flux Affects Venture

Down rounds exceeding up: Q1 &Q2 ’09

First time since 2003

Table from Fenwick and West

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2009 US Software Trends and Gaps

Economic Flux Affects Venture

Charts from Dow Jones

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2009 US Software Trends and Gaps

Economic Flux Affects Venture

44% fall of venture $ in US

companies
(first half of 2009 versus 2008)

Source: WSJ Sept 28 Issue: “Sharp Drop in Startups…”

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2009 US Software Trends and Gaps

Counting on Startups

• Last 16 years, startups (<90 days) = 14% US hiring

• Startup count comparison
– „00-‟03 # startups fell 9%
– „07-‟08 # startups fell 14%
• SBA given $730M to jump startup business loans

Bad Shifts
• Startups out of necessity not opportunity
• Healthy risk is disappearing with access to capital
• Students shift from startup to established companies
Stats from source: WSJ Sept 28 Issue: “Sharp Drop in Startups…”
Gartner’s 2009 Hype Cycle
CONFIDENTIAL – DO NOT DISTRIBUTE
Gartner’s 2009 Hype Cycle
CONFIDENTIAL – DO NOT DISTRIBUTE
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2009 US Software Trends and Gaps

Mobility Present and Future

• AppStore’s disruptive proliferation

– Carriers fight against becoming “dumb-pipe”
– Key is in developers and middleware portability
• Mobile VoIP impact
– EU: new policy against blocking Skype and Google
– US: wifi versus wireless impacts carrier
• Next steps
– App discovery and personalization
– Smart middleware development tools
– App aggregation > Publishers
• Opportunities
– Cross-border mobile collaboration & venture arbitrage
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2009 US Software Trends and Gaps

Cloud Computing

• Cloud computing changing scientific method

• IDE + Integrated cloud management
– Aptana (Ajax/RoR/PHP), Bungee Labs (C++/C#)
• Amazon leads by far
– IaaS versus PaaS: language agnostic wins
– EC2 Firewall, encryption, Cloudfront as CDN,
– DB backup via Oracle or native AWS storage
– Persistent Storage
• Next steps: Real DB adapters, 99.999% SLA, agorics
• Opportunities
– Global IP for grid services
3 2009 US Software Trends and Gaps
Personalization,
Discovery and Data Mining
• Ubiquitous personalization
– Behavioral Targeting: products, ads, apps
– US technologies afraid to benchmark lift
– Most use same basic techniques
• Gaps
– Good statistic models, high lift generation
– Dating, Medicine (key is actionability)
– Easy SaaS delivery or centralized API
• Opportunities
– Global IP, Cross-border collaboration
4 2009 US Software Trends and Gaps

Conversations Have Changed

• Blogging ›› Microblogging
• Calls & email ›› SMS, status & video
• 1D threads ›› xD collaborative trees
– Google Wave and UberVu
• Gaps: conversation value
– Facebook now breakeven, Nielsen + Facebook
• Next: mobile video chat?