More bad news for Startups and Venture Capitalists from the New York Times “bits” section about technology trends. Not only is the number of IPOs falling (zero in Q2 of 2008), but it also the number of mergers or aquisitions of startups appears to be way off as well.
Venture capital folks look to the most favorable “liquidity event” and generally that is an IPO where they may realize tens or even hundreds of times their original investments. Also favorable though generally offering less profit than an IPO is an aquisition or merger where other companies take over the startup without it going public.
I found this number very interesting and potentially alarming for Venture investors: An average of 8.6 years from startup to IPO, the longest in some time. Given that the present value of money is greater than future value, time horizons this long suggest, for example, that even a doubling of your VC money over that long period of time would represent only a “fair to poor” return compared to alternatives. Given that most startups never go IPO anyway it would seem that the risk factor is going way up for these investments.
Market watcher Henry Blodget’s bullish on the prospects of Firefox and for good reason. Firefox has 15% of the potentially *extremely* lucrative browser market with most of the rest resting in the hands of Microsoft.
Blodget goes so far as to suggest a merger with Netscape, leading to a mega browser company that would then partner with many and build a more aggressive marketing plan.
It’s a very good idea and something to watch carefully.
Why not Flock?
I’ve wondered why Flock has flailed away in the browser market, so far without much success. It’s a great product with very sharp folks behind it, and it rests on a great idea – socializing the browser. But I think Flock was ahead of it’s time. In the meantime websites used mashups and widgets and such to socialize themselves, leaving Flock less valuable than it would be in a world where you could not easily get cross-website activity within your existing browser.
Even early adopters (well, maybe not Scoble, who seems to try a new application every 15 minutes) are pretty stubborn about changing applications. Google’s been the biggest beneficiary of this tendency which many wrongly attribute to superior search results. Results matter, but not as much as “momentum” which kept us all using MS Office products well past their prime.
But this factor probably won’t inhibit Firefox adoption any more than it already has – Firefox is a popular application and has enormous positive buzz, and as Blodget notes they’ve done little to hype or promote it yet.