The past 15 months has created a lot of confusion around where the technology sector is going. I’m constantly being asked by entrepreneurs if the timing is right to start a new business and would I invest in these current markets? Yes and yes.
The endless chatter about the bottom falling out, valuations being too high (they were) and companies going out of business created a minor drought in seed and venture deals getting done and companies getting started. That time has passed.
Drama creates page views, but the reality of the markets is simple: Interest rates are as low as they’ve ever been. Money is flowing and flowing at very attractive rates. If there’s ever a time to start a company, it’s right now. There are more engineers looking for work at this very moment and fewer entrepreneurs pitching. The timing is ideal.
More importantly, venture firms are raising and closing new rounds. The majority of those funds must deploy their capital within four years, so there’s a lot of money sitting around needing to find a home.
Seed funds are investing at a normal rate, and, while valuations have swung back to a normal size, deals are closing.
I’m not advocating building apps for the sake of more apps. Those won’t get funded. I would urge entrepreneurs to attain funds, while they’re available, for strong ideas, even if it’s not at the valuation you think is acceptable. (The way around valuation discrepancy is to take less at a smaller valuation, keep costs at a minimum and make up the difference at the next raise.)
There are areas that are more prime to start than others. Apps are great, but they’ve been done, so the barrier to entry is low. Consumers and the larger market have reached a certain threshold of saturation. As those markets have matured, as we’ve seen with others, entrepreneurs are having to solve more difficult problems to get ahead. After all, businesses that solve difficult problems provide value.
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In that vein, firmware and software coupled with hardware are required to power almost everything. Those markets are far less saturated and much more attractive for investors. Entrepreneurs should be thinking outside of the core internet. I’ve hinted at some big ideas that are prime for discovery and exploration, mostly related to ARM chip architecture.
Speaking as a fellow entrepreneur, there is not a better time to start a business. Keep your nose out of the blogs and see the forest through the trees. Be aware that the larger landscape paints a very different picture. It’s an ideal time to be building products — the markets from all aspects are prime.
