The fastest way to become roadkill to venture capitalists is to become a software company. Software may not be inherently evil (it has created wealth for many people that is in proportion to the pain it has provided to many customers). Software and specifically on-premise enterprise software, however, is clearly dead to the VCs that help foster the industry. And while VCs have been known to make mistakes – sometimes on a grand scale – the mistakes are usually confined to individual companies, say like Webvan, rather than industries as a whole.
The thriving industry today is the Cloud. It is impossible to overlook the amount of investment in the cloud in recent years. In the last calendar quarter over $1Billion was invested by VCs in technology start ups – a whopping 1/5 of all invesment. Investment overall has been down, but technology and particularly cloud investment has increased. A close second was social media, which inherently is part of the cloud.
You don’t need to read the tea leaves to see that the shift is not coming, it has already been happening. We didn’t want to rattle off stat after stat on the phenomenon. Instead, we went right to to the VCs and analysts.