A new year is a good time to take stock and look around to see where the best investment opportunities will come from in the year ahead.
There are now some well established trends – mobile, data and cloud solutions – are all creating new investment opportunities for angel investors.
However, the opportunity to enter the social media space is (or has) closing according to Nic Brisbourne in his equity kicker blog.
Instead, Brisbourne is highlighting the enterprise software sector as the area of greatest opportunity.
What Brisbourne is saying here is that the scale required to deliver rapid software developments has shrunk and therefore, small players can deliver just as quickly as larger players.
In addition, smaller teams – here I’m talking about less than 100 people, possibly many fewer – can probably make a bigger impact than huge teams – which was the preserve of the large software development companies.
We might wonder on the cause of this change, but it is only reflecting that most entrepreneurs have know for a long time – that is, open source and cloud based software beats the heck out of proprietorial sofware with its lock ins etc….
It also means that more income will be earned from intergrating and installing software, rather than originating it. So, more cash for consultancy, less for software sales – unless, the software is sold as a SaaS on a subscription basis.
Here Brisbourne points out that rapid development also allows systems to be delivered and earning revenue earlier – which again, opens the market up to smaller and more nimble players.
Essentially, the cloud is removing the benefit of scale – and that no matter how many users or how large your sales or distribution team, everyone is equal. As soon as the software updates are uploaded on the cloud, every customer has the latest!
Hence, the time for small software companies – using agile development techniques and cloud deliver – 2012 should provde to be a great year.