If you don’t regularly read Fred Wilson’s blog, avc.com, you should. Fred is one of the best VC bloggers out there, and the discussions his posts inspire among his readers are stuffed full of valuable insights.
Fred’s firm, Union Square Ventures, invests in the disruption of the global economy caused by the increasing liquidity of information enabled by the internet. Notable investments include Twitter, Etsy, and Zynga. You can see a timeline of Union Square’s investments here.
Fred’s post, “What Has Changed,” is one of the best posts on technology investment trends in a long time. Here’s the summary:
VC funding of consumer web and mobile companies is down 42% in the first nine months of 2012 (vs the first nine months of 2011).
Here’s what changed:
1. The consumer web has matured, We are almost 20 years into the consumer web and we have a lot of platforms that are starting to suck up a lot of the oxygen; i.e. Google, Facebook/Instagram, Amazon, Twitter, eBay, Linkedin, Yahoo, WordPress and Craigslist. It is harder than ever to build a large audience from a standing start.
2. The consumer is moving from desktop/web to mobile/app. This is the single biggest trend in the consumer internet space right now. Most new startups need to build for iOS, Android and web at the same time. It’s making the startup more expensive and time-consuming. Distribution is much harder on mobile than on web, and we see a lot of mobile first startups getting stuck in the transition from successful product to large user base.
3. The momentum/late stage investors have moved from consumer to enterprise.
The wind that has been at our back for 7-8 years in consumer internet is no longer there. It’s tougher sledding and will likely continue for some time. We’re still in the early innings of a more challenging environment for early stage consumer internet companies.