I cannot emphasize enough the exciting opportunities that are in front of us. In case you have not noticed, Andreessen Horowitz announced the closing of a $1.5 Billion Andreessen Horowitz Fund IV. Yes, that is a Billion. In addition to that True Ventures closed a fund for $350 Million. The announcement by a16z is what inspired me to write this blog post. Here is an excerpt from that announcement:
We believe this is an incredibly exciting time to be a technology investor. The ultimate market size that this current generation of tech companies can go after dwarfs that of previous ones.
The obvious reason for this is mobile internet penetration: We’ve gone from an internet population of 55 million users to nearly three billion, and smartphone users are expected to grow from 1.5 billion today to five billion in the coming years. The winners in tech today can become massively larger than those of previous decades because the markets they can sell into are enormous, and growing.
I believe these kinds of funds create tremendous opportunities all over the world it is not concentrated in Silicon Valley, although the bulk of the money goes into the Valley. According to the post the total amount of venture money raised by the industry is $16-$18 Billion a year, I wonder how much the investors in Iceland invest in this asset class? My educated guess would be about $20 Million in a year, yes you heard me right $20 Million that is about 0.11% of the amount invested in the US.
I believe that there is a huge opportunity to find strategic fits around the theory that a16z looks at, the broad theme is the Software is Eating the world and more recently the Full Stack development. These themes allow smaller startups to find a unique niche, create a market for that value proposition and typically get positioned to be acquired by those larger startups who are looking at the Full Stack to accelerate their development. I believe there is merit in this investment strategy and I believe Iceland can create, build and export those smaller startups. These startups do not require a lot of capital and with the current state of software and infrastructure it is easier to get to market and create value. Here is another excerpt which validates that thinking:
Yet as these markets have grown, the technology costs required to support them have fallen dramatically due to developer productivity tools and cloud-based computing. For enterprise in particular, the advent of SaaS and BYOD has expanded the market opportunity. Why? In previous tech generations, selling to an enterprise required both the support of the end-users of the application and the IT organization. The limiting factor on application deployment for enterprises was the finite capacity of the IT organization, since they would ultimately have to install, support, and manage the applications internally. With SaaS-based applications, however, individual departments within a large enterprise can find and adopt new technologies freed from the constraints of the IT organization’s support capacity.
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