VC & Cloud: The Best Yet to Come?

The cloud has been described by some as the next industrial revolution, and the cloud is will certainly change how the human race goes about their everyday life. Since cloud innovation is ripe, investors have lined up to fund these ventures so that they can profit off of the impending global adaption of cloud computing. While investors may be lining up to throw cash at cloud ventures, data shows that investors are smarter and more informed than ever which has made the process of obtaining VC much more difficult than in years past.

An info-graphic produced by NetworkWorld shows a graph that charts VC funding since 1995 up until 2013. The graph shows that VC funding in 1995 was around $8B total and in 2013, the total funding eclipsed $29B. This graph shows the trends in VC funding as well as the ups and downs over the years. The graph shows a sudden explosion in VC funding in year 2000 which chronicles the “Dot Com Boom and Bust.” This is notable because so many VC investors have jitters about sinking money in the cloud because they were burned on upstart website ventures that went bust during the early 2000’s. In the year 2000, the venture capital provided to tech startups eclipsed a staggering $105B. The following year, capital fell around the $40B level.

What can cloud entrepreneurs learn from this data? Venture capitalists have an incredible amount of due diligence at their fingertips and that is partly thanks to the cloud itself. Compare the quality of data available today versus the quality found in the year 2000. Venture capitalists are now more informed than ever in regards to trends, market research, overall sentiment and measured costs. VC firms are now equipped with smarter data due to intense analytics which can be gathered using cloud services. Although venture capital has fallen almost 65% since the year 2000, this does not necessarily mean that venture capital is drying up. It just means that the competition is fierce and investment dollars will only flow when a VC firm sees an idea that fits into their model of success. In terms of future innovation, a venture capital world that is dollar smart and cloud keen is something that is good for the planet as whole.