Monday, February 2, 2009

David Skok, Matrix Partners: Need-based startups will thrive

By Galen Moore

If Matrix Partners’ David Skok were about 20 years younger, he might move to China.

The U.S. still has the best support environment for entrepreneurship, but China’s large, well-educated population puts it on the cusp of great things, he believes. “It’s right at that stage where huge growth is going to happen.”

Skok had this and other pearls of wisdom for an audience of aspiring venture capitalists, entrepreneurs and private equity investment managers at Harvard Business School’s Private Equity and Venture Capital conference Saturday. Skok, whose investments include Digium Inc., OpenSpan Inc., Solidworks Corp., Unidesk Corp., VideoIQ Inc. and Virtual Iron Software Inc., was a keynote speaker at the event.

Whether they become ex-pats or not, innovators and investors would do well to look for the nexus between unmet needs and new technologies, Skok counseled. He outlined a whiteboard exercise, in which people’s pains and desires are listed on one side, and new technologies and business models on the other. Good startup ideas exist where items on either side of the board can be connected, he said.

Venture capital investing and the startup economy will remain healthy — not in spite of the dearth of limited-partner investor dollars, but perhaps because of it, Skok said. “We’ve had too much capital chasing too few good deals,” he said. As a result, good companies have been hurt by me-too competitors.

Now, some of the best areas for investing are clean technology, cloud computing and software as a service, Skok said.

“The consumer has become a huge center of innovation,” he said, “rather than the enterprise being the early adopter.”