Data Sets Are The New Server Rooms

Over the course of the last 12 years or so, we've seen an evolution from large traditional VC firms investing $5-10M per company in the first round of financing to the emergence of "micro" VC firms investing in rounds $1M-$3M dubbed "seed rounds". This evolution has also spawned even smaller firms investing in rounds of several hundreds of thousands of dollars as well in a stage referred to as "pre-seed". As Mark Suster wrote in his post linked above, the emergence of open source software and cloud computing completely eviscerated the costs and barriers to starting a company, leading to deflationary economics where one or two people could start their company without the large upfront costs that were historically the hallmark of the VC industry. These lower barriers to entry has led to a "cambrian explosion" of startups but hasn't necessarily changed the rules of business. Without a defensible moat, it's just about impossible to create a large company with sustainable profits.