DIGITAL ARABIA ANDENVIRONMENTALTECHNOLOGIES INAMSTERDAM: GROWTHOPPORTUNITIES ANDVENTURE CAPITALSTRATEGIES FOR 2012Jim de Wilde www.jimdewilde.net
TRENDS AND STRATEGIES inGlobal Venture Capital Rotman Venture Capital Strategies MBACompanies are cited for educational purposes as examples of business models andstrategies without any implied endorsement of them as an investment.
TRENDS FOR 2012 Globalization of the digital economy will produce economic growth and the development of globally-linked venture capital with business models designed for the era after the Global Economic Realignment. Sustainability creates new products and new markets around the commercialization of environmental technologies. DIGITAL ARABIA AND ENVIRONMENTAL TECHNOLOGIES IN AMSTERDAM
Digital Arabia The digital architecture is familiar The growth rate of adaptation is potentially highly significantArab Bank signs private placementmemorandum with Oasis500 to Invest inOasis Venture 1
PRECONDITION FORENTREPRENEUR-LED GROWTH#1 A talent pool around a university (the mill- wheel of the ecosystem generating thousands of new high talent individuals annually). This is why Stanford, Waterloo, Helsinki University of Technology, Cambridge has proven to be such fertile epicenters for entrepreneurial venture capital. Daniel Isenberg of Babson writes in the ECONOMIST on the development of this kind of ecosystem.
PRECONDITIONS FORENTREPRENEUR-LED GROWTH#2 A venture capital community that is linked to global best practices in the development of new industries. One can back an entrepreneur to build a bowling alley without being a “venture capitalist” in my definition……A venture capital firm is defined by its global reach, its professionalism and as such is analogous to a university engineering department or a symphony orchestra. One can build a bridge or hum Brahms but to succeed, one knows who the best symphony conductors and most creative structural engineers are. It is amazing how often this point is omitted from discussions if venture capital.
PRECONDITIONS FORENTREPRENEUR-LED GROWTH#3 There has to be a success mix in the ecosystem. In Montreal, entrepreneurs can see how an inventor-entrepreneur with access to a world-leading engineering school could create Bombardier out of a company that started off putting small motors on skis. In Indianapolis, one can see how agricultural chemistry can be commercialized into multibillion products at Eli Lilly. We overuse the word ecosystem, but it is an accurate metaphor for the preconditions for success in modern venture capital.
VENTURE CAPITAL TRENDSFOR 2012 #1 (1) Food production will drive global capital markets for the next decade in the way energy did in the 1980s and 1990s. Innovation in all areas of food (profitable use of arable land, preservative technologies, packaging innovations, cultivation of new food sources) will revolutionize capital market thinking as Chinese, Indian and Arab investors determine a different set of priorities for their investment portfolios and G8 investors become more conscious of the environmental risks of the current food production model. There are several new investment models reflecting this new trend. New Seed Advisors is an excellent and high profile example of these new trends.
VENTURE CAPITAL TRENDSFOR 2012 #2 Education is redesigned. The Khan Academy is one example of many, but well known and critically acclaimed . Some venture funds position themselves to be poised for this disruption but as content, education, gaming and entertainment create a complex new Venn diagram, the likelihood is that this will be even more disruptive than we have previously imagined. For the beginning of this see some of the work being done at MIT’s Media Lab: http://web.mit.edu/press/2011/mit-launches-new- center-for-mobile-learning.html and the Center for 21st Universities at Georgia Tech http://www.cc.gatech.edu/research/21stcenturyunivers ities.
VENTURE CAPITAL TRENDSFOR 2012 #3The commercialization of technologies requires a whole new business model.For years, a European venture capitalist and I have been advocating a50TECHNOLOGIES.COM concept for focusing on developing acommercialization process in areas, which are not as hot as data storage orindustrial biotechnology. For practical purposes, we need to invent newinvestment models, specialized venture firms with a capacity to work withglobal scientific researchers to bring to market new ideas in everything fromacoustical engineering to marine ecology.We are creating new technologies with commercial applications and yet theprocess of commercializing new technologies remains haphazard. Weeither rely on corporations to do this (Bausch becomes the instrument forcommercializing ophthalmology) or we expect venture capita firms that areconcentrating on mobile applications of alternative energy to broaden intoother areas. The MIT Technology review remains the source to be followedand Boston area VCs have taken the lead in a number of these areas, whichare off the radar, e.g. biofuels where an earlier MIT Technology ReviewInnovator of the year became, a venture partner. This year’s TR 10 can befound at http://www.technologyreview.com/tr10/. Another perspective on newtechnologies comes from the Electronic News.http://www.eetimes.com/electronics-news/4231126/EE-Times--20-hot-technologies-for-2012 .
VENTURE CAPITAL TRENDSFOR 2012 #4 Social media generated content will change a number of markets, including how we spend our entertainment dollars. This trend has already started to take place but we still aren’t sure about the business models. See for example the excellent analysis by Ross Garland in the Wall Street Journal: http://blogs.wsj.com/venturecapital/2011/02/18/ social-media-genomics-driving-data-tsunami/.
VENTURE CAPITAL TRENDSFOR 2012 #5 We will need new technologies to sort through and present the data, which will be collected as crowdsourcing, and remote sensing makes more data available than we have ever imagined. The world of data crunching will develop different business models, transforming healthcare among other sectors. The aggregation of data will change. I am a believer that crowdsourcing will be disruptive in many ways: anti-corruption efforts that aggregate recorded patterns of corruption, epidemiological data that leads to best practices health care. Data analytics is going to put unimagined demands on the existing system leading to information design companies, which simplify the presentation of large pools of data and the investment in companies like Kaggle. For a sense of the scale of the venture capital activities in this space.
“We are all venture capitalistsnow…”The point for venture capitalists is that new areas ofvalue creation are increasing, not decreasing. Thepoint is also that sources of capital are increasing, justcoming from new places. The business models of thepast will be replaced by new business model. Socialmedia will replace some institutional investors andpeople will (how radical is this?) be rewarded by whatthey build as opposed to how much money they canraise from existing networks.When there is this much change, the skills of bestpractices venture capitalists become more in demandthan ever, which is why we do what we do,