Multithreaded

One of the great things about Web 2.0, compared to the dot-com boom, is how much of it is happening in Europe. Living in England in the late nineties it often felt as if dot-com was something that was happening elsewhere. This time around, much more innovation and development seems to be going on in Europe, for example sites like NetVibes, Plazes and others. In addition, Europe is hosting quite a number of Web2.0-related conferences such as dConstruct, Flash on the Beach and, Le Web 3. We also have the Future of Web Apps coming up in London in February and Ajax World Europe in Amsterdam in May.

It seems to me that at least part of the reason for the level of activity in Europe is the difference in financial model for Web 2.0. The dot-com boom was all about investing a lot of money, developing fast and then going for IPO. Burn rates for dot-coms were legendary and the capital was available on the basis that the investors would reap huge rewards on flotation. This, of course, meant that access to the much more flexible and willing US stock markets was very important.

Web 2.0 seems to be going about things differently. Companies are starting up on shoestring budgets and the exit strategy seems to be to be bought by Google, or some other cash-rich survivor of the last boom. The hardware and software necessary to get an idea off the ground is now trivially cheap in comparison to six years ago so the major cost is people. That means that two or three people who are willing to invest their own time in developing an idea can come up with something innovative and viable in a few months so access to a lot of liquid capital is not as necessary.

This is reflected in the changes in capital funding. I am reading that traditional VCs are having a hard time finding places for their moneys. Business angels are much more dominant. These are people who will put up much smaller amounts of money than VCs but not demand nearly so much equity in return. It seems a startup is more likely to go for a couple of hundred thousand pounds rather than a couple of hundred million.

What it boils down to is that it is good news for those of us in Europe (or at least on the edge of it in England) who want to participate in this wave of innovation.

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