Investing

Ron Conway: Investing in a Down Economy

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Photo: Ron Conway

Downturn:

Since the start of the new year, many people have asked me if I am going to reduce the number of investments during the down economy. I intend to do just the opposite. I feel there has never been a better time to be investing in or starting a company than the current environment. For entrepreneurs, a downturn often represents one of the best times to start a new business. Great people are often more available, there is generally less competition from other start-ups, and vendors are often open to negotiate better prices.

During these times, I’m looking to get even more active than I have been in the past. I plan to make 40-50 investments in the next 12 to 18 months. I will continue to focus on capital efficient, consumer Internet start-ups and the latest sector I’m most excited about is the “Real-time Web.”

Real-time Web:

It feels as if there is a major shift occurring in the web today. A number of factors are responsible for this: increased capabilities of location-aware smart phones, a shift of users’ behavior around sharing information online, enhanced connection to broadband networks, improved mobile camera and video devices. These factors among others are all contribute to this shift.

Platforms with explosive growth like Facebook and Twitter have built the networks and infrastructure to allow individuals to share and publish vast amounts of new information to the web. These platforms along with numerous others, and their millions of users, are responsible for creating a new corpus of content, information, and entertainment. I’m calling this new information real-time data. Others call it, the now web, or the real-time stream, but regardless I believe it is a multi-billion dollar opportunity and innovation in this sector is set to explode. I plan to spend a lot of time on this sector with my new investing entity called SV Angel LLC.

The Users:

Crowd sourced collective wisdom data from global users’ contributions created and consumed by the “always-connected” devices provide massive streams of content that have never before been available up until now. The structure of these networks allows anyone to create and share information and content that can be re-syndicated and re-shared by millions. This new corpus of spontaneously created content represents only a tiny amount of data on the web today, but will explode to over 15-20% in the next few years in my opinion.

I feel that over the next two to four years this trend will represent an increasingly large amount of data to be consumed by users on the web. With any new technology, user behavior, and fundamental shift dozens of supporting technologies will spurn the creation of hundreds of new companies.

The Opportunity:

New forms of search technologies, media discovery, advertising, analytics and photo and video sharing applications are just some of the existing technologies that will emerge, but in a new form, in a new company, with new founders to capture and shape the landscape of the next version of the web.

Innovation happens all the time. The web will have cycles of innovation. History will repeat itself and new business models will emerge. I’m excited to see evolutions of known models to support this new ecosystem, as well as totally new innovations that can happen now only because of where the web is headed.

Ron Conway is a Silicon Valley-based angel investor who was an early stage investor in Google, Ask Jeeves and PayPal.