Note, these are just thoughts, not a reflection on “whatever the hell it is I'm up to…”

There's been a lot of talk online recently about VC 2.0 and I think I need to chime in with a few thought. These thoughts are based around the whole premise of current VC funding strategies (or rather as I see them, what do I know - I'm a noob).

Pretty much every startup these days seems to be a one trick pony - we've got a cool idea; name it; oh, and that's the name of our company also. Funding. Build. Sell.

What happened to actually building a company? You know, one that had a plan past product one. Or the flip.

Almost daily I see new buzz around startup X with product X, obviously hoping a business model and funding will come along.

Rarely do I see a “here's a cool product and a team with a plan for world domination”. Well, excluding Bungie, obviously. Oh, but Microsoft bought them.

And that's kinda where I'm going. Bungie had product[s]. Plural.

In the game development space, things work differently. It's more like an author/publisher model. The developer (maybe a startup) forms with some very creative and technically competent people, and they come up with an idea.

At this point I need to apologise to everyone in the gamedev space for over-simplifying everything.

Now where was I?

So they pitch their idea to a publisher and they get funding to build to product. They ship, everyone takes their cut and the developer gets royalties (the funding was the “advance” bit).

Assuming the developer was successful, everyone makes out like bandits and the developer in question grows their company, gets to not layoff all the people they hired to build the first product and moves on to the next one. Actually, they're crossing the arcs and starting up the new product as the old one is winding down - they're out looking for funding (a publisher agreement) for the next product concurrently with the first. Maybe they get to self-fund after the success of the first product.

My point? Where is this model in the non-game space?

Where is the funding for the product, as opposed to the company?

What the publisher in the non-game space brings to the table in testing resources, end-user tech support, distribution, etc… Very similar to the web 2.0 space and it alludes a lot to what Scoble is saying.

Key competencies of a new startup are probably technical. Amortize the other costs (tech support, marketing, server space, etc…) across them by being the “publisher”. Make gobs of cash from the product.

Of course, this isn't the “3/5/10 million or nothing” investment that VC 1.0 is looking for, but it does portend to another untapped opportunity.

Just my 2c. Oh, and if anyone wants to cut me a nice large check for my product-as-company, feel free.

Small denominations preferred ;-)