Last month's quarterly venture-investment numbers contained little surprises save for one: Why is software so much more expensive to develop??
Last month's quarterly venture-investment numbers contained few big surprises.
Quarter-to-quarter funding increased but year-on-year the numbers were down. Sages say the Facebook IPO fiasco has cooled things a bit. (You can play with the numbers yourself, courtesy of this customizeable chart from the National Venture Capital Association).
Semiconductor numbers are up ($341 million in Q2 v. $209 million in the previous quarter); they're down just slightly on a year-on-year basis.
But here's the thing: Internet startups are eating everyone else's lunch. And they're getting beacoup bucks. But why?
Not long ago semiconductor startups were said to require $100 million to get a chip out the door. Then it was $75 million and then $50 million and so on.
When our Drive for Innovation put into Lexington, Mass., last fall, we visited Adapteva, where they've put together a massively powerful chip for $2 million.
So why do Internet software companies need so much more investment? Pinterest, a goofy time suck of a social networking website that allows you to "pin" images and webpages to your profile to share with people who can't wait to see them, just landed another $100 million. One hundred MEAL-YOHN DOLLARS!
Presumably the engineering costs aren't radically different than in our industry (hello open-source software?).
Is it marketing and sales costs? Celebrity chefs? It is that the software guys just haven't gotten productivity, efficiency and design discipline down yet? Is it just a lot of investors pouring good money into "the next big thing?"
What is it? Please help me out here.
-Silicon Valley Nation: Long live the nation