For VCs, Blogging is the Next New Thing

Wi-Fi is old news, and social networks are fully funded. So what’s next for Silicon Valley venture capitalists? How about Blogsphere? Expect a spate of announcements in coming months, and of course I have some juicy scoops here. Read on….

Silicon Valley venture capitalists believe in one thing – herd mentality. Never the ones to go out on a limb, they tend to flock for deals which others are doing. This herd mentality is what brought to us four online pet stores, half a dozen toy shops, and nearly three dozen wireless LAN switch makers. If Friendster was good investment for Kleiner Perkins Caufield & Byers, then Sequoia could not be left behind and invest in Linked-In. And if all the rumors I am hearing from Silicon Valley sources are correct, then the next new thing for the capitalist fools is web logging!

Which is not such a bad thing, after all there are many very smart people who I admire, who will get funding from some venture capitalist or the other. Call this trend Blogging For Dollars! (A couple of weeks ago, the November issue of Business 2.0 magazine hit the stands, and it featured a mini-profile on SixApart, a company co-founder by high school sweet hearts, Ben and Mena Trott, the power houses behind MoveableType software and the TypePad web log service. The story was titled, Blogging for Dollars.)

A lot has happened since then, and I have a couple of micro-scoops for you. My sources tell me that David Sifry’s Technorati is about to receive a substantial bit of funding, most likely from August Capital soon. No confirmation, and this could be a rumor of course! (And talking about rumors, Tribe.Net is also close to getting a big round of funding from one of the Valley big guns, though it has nothing to do blogging!) Elsewhere I have heard Scott Rafer, co-founder of Wi-Finder and newly appointed chief executive officer of FeedSter is beating down the bushes for funds and will get them shortly. His model of combining ad words with RSS feeds is an attractive business proposition. Chris Alden, the co-founder of the vintage Red Herring magazine is working on a start-up that will be a combination of blog-directory and a publication. (Details pending!)

Many start-ups have cropped up and are copying the hosted web logging business model of TypePad, and others are in the works. This market is getting fiercely competitive and over crowded. These are all interesting developments, and hopefully will help some of the blogging start-ups we love so dearly. (My big question is who are the people most likely to get funded next?) Having seen the blogging evolve from its early days, I find it amusing that venture capitalists have suddenly discovered this new trend. Herds! or Un-Smart Mobs!

While funding tool makers or service providers such as Six Apart and FeedSter makes sense, I am not so sanguine on the prospects of weblog-pubs etc. I think Nick Denton hits it right when he says this and this.

By the way Jason Calacanis thinks I hate him. And to that I say NOT!
Recommended reading
* Jason Calacanis
* Dawn of The Micro Pubs
* Return of the Boom time hype merchants
* Social Networking Companes Garner Venture Capital