Venture development firm

Mind's a blank slate this morning, and it's later than usual. The day with all its competing demands is pressing in on me. Not sure how much I can write before I'm swamped and spinning and pulled in all directions. Have been having a series of business ideas for the past few months that share a similar theme, though I can't quite articulate the theme yet. Maybe I'll describe each idea in as much detail as I can over the next few days and see what happens.


The first idea occurred to me in February or so, when I was chasing down leads for development teams to code for a friend's business idea. His idea ended up on hold but the episode suggested to me a larger pattern. He is a business man, quite smart and creative, but in a field that is decidedly not high tech. Nonetheless, the opportunity that was getting him excited was one with a strong Web component at its core. In other words, it was a Web-based startup being proposed by someone without a development background or skills.


If there is substance to the Web 2.0 hype it seems to me that it has to do with the Web becoming increasingly "business-like." That is, concerned with, optimized for and supportive of commerce. The first wave of "e-commerce" (ew) was just a storefront or mall with a catalog and checkout as its technological advances. This wave promises more, but not necessarily technologically. The tools and components are still pretty basic but the difference is their granularity and the familiarity that has grown with the Web itself in the business community. It seems natural for a new business to depend on the Web for some or all of its critical functions, even to a non-technical businessman. The web-based services that can be used to assemble these functions are granular enough to express a very broad array of business model components and aspects.


Therefore, my idea: the average businessman outnumbers the tech-savvy entrepreneur, and therefore the great ideas of this generation of Web-dependent businesses are more likely to come from regular guys than techies. Regular guys can't develop Web applications or services or host them or maintain them. Nor would many of them want to retain and manage Web development teams fulltime from the start of their idea. So what's needed is a new flavor of venture capitalist - one that eases access not to financial capital but intellectual capital. The new VC firm needs to focus on technology enablement and augmentation of startups rather than business enablement.


The new VC firm would center around a top-flight development team, a small one. Individuals would come in to pitch their businesses with a focus on the whole model and their particular dependence on Web technology, a Web application, and Web development. The firm would offer a range of services, from pure outsourcing of development & maintenance, to vetting and rounding out the startup's technology strategy to taking an equity stake in the firm in exchange for becoming its CTO and IT department. Over time, the firm's portfolio of companies would expand and the traditional exits could be sought.


One major benefit of this model is that the firm could be self-funding - those startups it doesn't want or can't take an equity stake in would pay full fee for the outsourcing services, which would be managed by the core development team but sub-contracted out to lower-cost, larger scale teams, possibly offshore.


The challenge I suppose is reducing the idea to something that is easily communicated and marketed, so that a steady stream of startups begin coming in the door. However, my experience with looking for an outsource developer for my friend's idea taught me that it's pretty hard to find programming services - a simple google search won't do. If I make it easier to find this new VC/programming firm than it currently is that would go a long way, I think.


So there's the idea. I wonder what Paul Kedrosky would think of it? (shameless linkage)