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In the News

August 9, 2004

Yahoo buys FareChase. Google buys Picasa. CNET buys Webshots. Monster acquires Tickle. Why have so many private Web companies been selling themselves latey, rather than raising VC money? We can think of two primary reasons. First, VC funding may be on the rise, but the supposed tech industry recovery is still something of a mirage. VC dollars are very expensive at the moment. Until the conditions improve, VCs will continue to make demands that many companies won’t be able to tolerate.

The second reason: Eyeballs. The advent of search/contextual marketing has radically (and favorably) transformed the economics of building a Web business, allowing relative unknowns like Tickle to make significant in-roads in a short period of time. But all the while, a select group of heavily-trafficked properties has continued to distance itself from the pack. The big are getting bigger and smaller players can’t keep up. By selling out to a Yahoo or a Google, you are gaining economies of scale that no amount of VC funding would be able to underwrite.
Read: June Web Rankings [comScore]
Read: VC Funds on the Rise [a:c]
Read: Yahoo buys FareChase [John Battelle’s Searchblog]


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