Software Applications: Exciting developments are taking shape

We are witnessing dramatic changes in software and the Internet. The open-source movement is having a significant effect on the market for enterprise applications that are more “service” than “product.” The product provides the infrastructure for the service, which is the real source of revenue. Technologies including XML and Ajax are transforming the Web from a communications medium into a full-scale platform for software applications. Web services and Open API’s have created new possibilities for creative extensions to existing applications. Folksonomies and aggregated content are increasing the importance of words for brand building. And Wiki’s have created a new open model for collaborative content creation.

Most importantly, blogging , social networks and applications built on LAMP-stack architecture are enabling entrepreneurs to locate, form and lead virtual teams to bootstrap the creation of capital-efficient software enterprises.

We not only recognize these changes, we have incorporated them into our model for Venture Capital 2.0. These developments and other factors have lead some to believe that a profound structural impact is transforming venture capital. Regardless, it is clear to us these developments require changes to existing models for early-stage investing.

Posted by Clarence Wooten on June 06, 2005
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