Venture capital, digital trends and the wireless industry in 2009

One of the most important things for any startup to know, particularly in the aftermath of an economic downturn, is where to go to find the money. A session at the Pacific Northwest Wireless Summit, held on January 19th at the Hyatt Regency in downtown Vancouver, set out to show where the investors are, and how to get to them.

Tony Fish of AMF Ventures moderated the panel, and Paul Lee, a Managing General Partner in Vanedge Capital (as well as a veteran of Electronic Arts) explained in a presentation where his company sees media going in future. Clearly, he said, all media is moving to digital, which means consumers are willing to pay less for their media, since it’s more readily available. Broadband, he said, is also expanding, even in the United States where the incoming Obama Administration intends to make better broadband a key policy. But there are many more global mobile users than there are internet users, Lee said, especially in Asia, so wireless is a very important arena to be involved in.

Cloud computing is another important trend, and will help get everyone’s “stuff”, such as photos, books, media and other digital assets into a globally accessible stream, rather than carry it around manually. Another key trend is that consumers are now producers, which Lee said we’ve come to expect. If something isn’t customized to our own tastes, we don’t want it, Lee said. That makes consumers a ciritical source of data, and performing analytics on their shared interests and goals is an important new aspect of business. Google Ads are only one example of this new “narrowing” of advertising and analysis.

All of these trends converge in wireless devices, Lee said. The wireless space will be incredibly hot, Lee said, but the venture capital community won’t be as hot, with some institutions reneging in their commitments.

Thomas Huseby of Seapoint Ventures pointed out that we’ve just been through a period where Wall Street defrauded investors, and that new businesses should have a business model that they can not only believe in but is truthful. He also said that an idea that doesn’t get acted on is a black hole, so entrepreneurs should work on their idea no matter what. And they should know that there’s no perfect plan, so startups should work with VCs who are willing to work with them on crafting that plan. Also, don’t work with those who are “amazed” with your product. That thrill won’t last, he said, but a deep understanding of what your product is capable of on the part of a VC is much more important. Most importantly, if you don’t need venture capital, don’t chase after it, he said. There are great ideas out there, Huseby said, that aren’t a company, and aren’t what he’s looking for at the moment, but are a great idea that an entrepreneur could retire on.

Steven Hnatiuk, a partner at Yaletown Venture Partners, said it’s obvious that media is transforming, and that tech-savvy companies who either create or deliver content have an amazing opportunity to take advantage of the fact that old media has no idea how to adapt to new digital realities.

Hnatiuk also pointed out that while there are lots of good ideas out there, many companies will not get funded given current economic realities. Companies will have to “tough it out,” and the future of VC funding may look like the past, where companies and VCs were in it together for the long term.