believe they can win. We want to know it’s someone who can take a punch and keep going.”
Cross says while the boom of startups does not necessarily mean the market has reached bubble proportions, he does see differences in regional markets. “There are some great things going on. I deal with the west coast, east coast, and Europe,” he says. “It’s definitely frothier on the west coast.”
Startups in eastern states, he says, face close scrutiny before deals are put on the table. “On the East Coast it’s always been: dig in, get into the details, really pull the diligence out of you,” Cross says. “Boston and New York have always been much deeper on that and much deeper on ‘will the model work?’ There’s always been that difference and it’s really heightened right now.”
Even in a crowded field of startups chasing funding, Cross says there are strong ideas emerging in the technology scene. “I see a lot of junk and I see some really good companies too,” he says. “There are some great apps, but apps are only going to go so far.”
Cross says though he does not see the same hype that swelled the previous tech bubble, he is cautious of what will become of high-valuation companies if the economy takes another dive. “If we get into a second recession, the double dip, those valuations will be crushing in terms of coming back and having to do down rounds,” he says.
Cross says he is impressed by some new innovations in cloud computing, e-commerce, and security technology. New ideas in advertising and media technology, he says, may provide answers to long-standing problems in those industries. Advertisers in particular, he says, want to better discern the return on investment for TV ad spots. “Now with online metrics and data, you can really understand what is effective advertising,” Cross says. The growth of online media content, he says, may lead to more advertising investment. “I am seeing in the IPTV world an explosion coming on as soon as TV ad dollars start to transition online.”
Technology and ideas alone cannot win over investors, Cross says, citing the importance of having the right team in place at a startup. “One of the things you hear again and again is: ‘We want to invest in is serial entrepreneurs. Somebody who’s had a success once before,'” he says. “That’s what every venture capitalist wants.”
