Ten Rules For Next Year's Deals

Is it too late to talk about the trends venture capitalists will be funding next year? (I hope not, because I’m about to.)

The subject came to me after an exciting meeting I had with an entrepreneur the other day. I promised not to discuss the entrepreneur or the deal, but while listening I came up with several Clues to what successful deals next year might contain.

1. Next year’s deals won’t depend on marketing – There’s a huge backlash taking place against the “dot com” TV mania now inundating your screen. First, the clutter means no one’s message is getting through. Second, TV advertising carries only minimal targeting. Finally, the whole idea has just been done to death.
2. Next year’s deals will define their buyers, their sellers, and (most important) their supporters. In other words, you’ll have to prove you’ve got buy-in from the right lawyers, the right media people, as well as the right players in your chosen market, if you expect to get money.
3. Next year’s deals will be about infrastructure. Don’t talk about why they want your stuff, but why they need your stuff, and what your stuff will do to save money for e-tailers, or ISPs, or others in the b2b Internet.
4. Next year’s deals will take the long view. The idea of building a list or traffic in order to get more funding (or IPO funding) won’t fly next year. Business models must show where the profits will be coming from to get a dime, and show that the model works to get a second dime.
5. Next year’s content deals will be broadband-dependent. Broadband will reach a “critical mass” next year (enough to replicate cable audience shares) so expect a lot of Hollywood and New York play.
6. Next year’s winners will have the air of authority or experience. If this is your first deal, make sure you have someone on board who’s been there before, preferably many times. Net virgins need no longer apply without adult supervision.
7. Next year’s deals will be harder to come by. You’re going to be reading a lot of headlines with the word “shake out” in them, especially referring to e-tailing, marketing, and venture capital. This is true even if the Internet stock bubble keeps expanding.
8. Many of next year’s deals won’t speak English. They won’t just be speaking Chinese or Spanish, either, but Italian, French, Hindi, and (yes, even) Arabic. Many of these deals will be funded in the US, however, because of distrust over the stability of laws governing business in other nations.
9. Some of next year’s deals will have ulterior motives. The power of the Internet will bring in lots of players who care more for influence than for money. That’s a hunch, mind you, but I think a good one.
10. Next Year’s Deals will happen. You will read a lot in the next few weeks about the venture capital window being closed. Don’t you believe it.

You can come back at me when the Millennium is about to REALLY start (i.e., next December) and we’ll see how well I did.