Is getting people to upload goofy pictures of cats and bad English signs a better business than venture capital? Cheezburger Network, the profitable publisher of “I Can Has Cheezburger?” and other absurd Web sites, recently raised $30 million to expand. That venture capitalists are skirmishing to finance oddball ideas that don’t need their cash is a good illustration of the industry’s problems.
Venture capital’s best returns historically have come from the information technology industry — in companies like Sun Microsystems and Oracle. The trouble is, traditional hot sectors like computer production and traditional software have matured. And the hottest area of growth — consumer Internet firms — doesn’t need much capital to thrive.
Companies like Cheezburger, founded by Ben Huh, need comparatively little cash to get off the ground. Input costs, whether they are servers or Internet bandwidth, continue to fall. The software needed to run Web sites is often available free. And finding customers online can be done in an instant if an idea catches on.
By ROBERT CYRAN and LISA LEE
Published: January 19, 2011
The New York Times.com