Venture Is Harder These Days, Says Industry Sage Bill Davidow

William Davidow is an author, a big thinker and perhaps the world’s expert on how Internet connectivity has accelerated the cadence of global business.

Davidow, 75, also keeps a hand in venture,  he co-founded Mohr Davidow Ventures several decades ago, where he remains listed as a partner emeritus.  I had the chance to ask him about the current state of investing. Here is what he said:

“I think venture is harder now than when I was an active investor. The reason is there is less margin for error.”

Companies require more money to grow up and take longer to go public, he said. Prices in the public markets aren’t as high as they once were (unless you are lucky enough to own a piece of a Facebook or Google), Davidow told me during an interview. “It’s harder to make money as an average investor.”

This will change, ultimately as fewer investors remain in the business, he added. But Davidow shied away from predicting when.

Davidow has his fourth book available this month: Overconnected: The Promise And Threat of the Internet. It is an interesting treatise on how the “positive feedback” loop of the Internet accelerates the pace of change and communications. The impact is felt most everywhere, from the melt down of Iceland’s banking system to the subprime mortgage crisis and the spectacular fall of the U.S. stock market.

Adjusting for this overconnected world is no easy task. It might require greater capital requirements in finance and perhaps an effort to subdivide large systems and markets into smaller ones.

Yet Davidow is an optimist. “I think it is a wild untamed horse,” he said. “But ultimately we will learn how to tame it.”