The hurdles to creating fantastic new software are falling fast, and it is now easier than ever to get your ideas out of your head and into the market in a few short weeks.
Here is a completely reasonable business plan for today, that was almost unthinkable just a few short years ago…
Go to (for example) StartupWeekend Seattle.
Pitch an idea for a product.
Gather a few people around and build the prototype in a weekend.
Buy server space and an online storefront via Amazon Web Services.
Work from a local coffee shop on a laptop and flesh out the product.
Bug test and complete the app and release Version 1.0.
Submit it to the iTunes Store.
People start buying it.
Use the initial income to get a membership at Office Nomads on Capitol Hill.
Meet with your team at “the office” twice a week.
Create buzz about your product by engaging the early adopters.
Field calls (via the conference room at Office Nomads) from people looking to partner with you and your product.
Decide this is a viable product, and it is time to make it into a company.
Strike up a conversation with us at Lighter Capital. Show us your positive revenues, and leverage that growth to get a Lighter Capitalfor $250k.
Establish your business. Hire staff. Develop more products. Get rich!
Notice what is missing from this process? There is no bank demanding collateral or a fixed monthly payment. There is no Angel investor taking a heavy ownership stake for the initial capital. There is no Venture Capital company giving you $4m for a huge slice of your equity, and then pushing you for an IPO (or to sell out) so they can make their money.
This is not a fantasy scenario. It is happening right now, and it is only going to happen more.
Yesterday over at Seattle 2.0, Nathan Parcells posted about this very thing in his article, “Plummeting Startup Costs, and the Rise of the App Store“.
2011 is going to see a seismic shift in where people get their applications (both for mobile and desktop machines) and while some of those applications are going to come from the usual old places, my bet is that most of them are going to come from the process I just outlined above.
This will set in motion a series of interesting events though the financial sector. And I believe Lighter Capital is in the proverbial catbird seat.