Above the Crowd

Do VCs Help in Building a Technology Platform; Part 2

December 5, 2008:

Over three years ago, I wrote a post titled, “Do VCs Help in Building a Technology Platform?“.  The premise (as you can go see), was that VCs who once primarily invested in companies built on Microsoft’s platform, had almost universal switched to the open source LAMP stack as their technology platform of choice.  This activity obviously helps reinforce the chosen platform, as the more apps built on top of it, the more universal solutions that are then available for that platform.  

I wanted to offer two updates that relate to this theory/proposition.    

First, Microsoft recently announced that startups can get three years of free software and service.  From my point of view, this thoroughly supports the theory that where startups are deploying matters.  Otherwise, why do it?  It also reinforces the point that developers have been moving away from Microsoft — choosing other platforms, which is what likely promoted the discount offer.

What’s perhaps even more ironic is that three years ago, the key alternative to choosing Microsoft as a platform on which to deploy your startup was Open Source (LAMP).  Fast forward three years, and there are three new entrants — Salesforce, Facebook and Amazon’s cloud service — that are all demanding an amazing amount of attention from VCs.  What’s more, each of these companies are doing a good job actively  reaching out to the VC community and encouraging development on their platform.  

It obviously would be overstating it to suggest that VCs help “choose” the platform that wins.  That said, it is a powerfully positive indicator if VCs show confidence in a new platform by shifting where they deploy their capital.


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