A Guide to Micro Seed Funding

 

Opportunities Arise Online

In today’s environment, there is growing opportunity to develop products and services for online use.  According to Nielsen-Netratings, the average person now spends over thirty-one hours a month on the internet. [1]  It is for this reason that established companies are shifting their advertising budgets away from the traditional print and television mediums into online destinations. [2] 

Source: PwC/IAB Internet Advertising Revenue Report (www.iab.net)

Companies are paying millions, or even billions of dollars, for websites that have widespread distribution on the internet.  Take the Google-YouTube deal for example.  Google paid $1.65 billion for this video sharing service which was created in February of 2005 and sold 1 year and 8 months later. [3] According to www.alexa.com, YouTube now reaches over 12% of the internet population on a daily basis.

The cost to initially develop a web-based product such as YouTube or Facebook is extremely low.  In fact, in the early stages of the company, the sole cost is usually the living expenses of the founders and a couple computers.  With a focused effort from two or three people, the web application can be developed and released within months and potentially spread virally to hundreds of thousands of users soon after.  This type of growth is clearly the exception and not the norm, however, a few entrepreneurs with a cool idea and the right implementation can quickly turn into internet superstars making them and their investors millions. 


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Notes:
[1] http://www.nielsen-netratings.com/press.jsp?section=pr_netv&nav=3
[2] http://www.iab.net/news/pr_2007_06_06.asp
[3] http://www.google.com/intl/en/press/pressrel/google_youtube.html