Start-ups such as eBay, Amazon, and Craigslist completely and irrevocably revolutionized the idea of a "marketplace." Purchasing (almost anything, from almost anywhere) can be done with a click.
But the marketplace for services--like teaching, cleaning, or construction--has yet to be truly disrupted. Companies such as Yelp may provide a link to these services, but Chin believes no company has yet to create a marketplace where purveyors of services can interact with buyers in a safe and trusted environment. But Chin believes that will change, and is on the lookout for what he likes to the call the "next generation marketplace."
"Our thesis is around services specifically," he says. "For a marketplace like that to work, you have to curate it. By curating, you're basically controlling and vetting the quality of the service."
TakeLessons is a good example of this type of marketplace--and one that Crosslink has invested in. It's a platform for users to find music teachers. Users enter their location and instrument type to find instructors, and TakeLessons recommends a few teachers in their area. But the transaction doesn't end there. All payment is made over the site, so both users and providers feel more comfortable.
"TakeLessons becomes the brand," Chin says. "In other words, if you're unhappy with the rodent removal guy, you don't call the yellow pages...The marketplace will become the trusted brand for the transaction."
5. More Web-commerce businesses will look to curation | Mike Kwatinetz, founding general partner, Azure Capital Partners
One of the greatest aspects of the Web is the seemingly infinite number of choices it presents. Kwatinetz, a founding general partner of Azure Capital Partners who specializes in software and infrastructure technologies, believes that's also a bad thing.
"The good is that if you know what you want to buy, it's very easy to find prices and work your way through it," he says. "But it's still a very time consuming experience. One thing that physical stores do well is curate--especially smaller boutiques. What they choose to carry is essentially what they think customers will want. On the Web, we have much less curation, and it's more that we have everything."
But that falls short, he says, for customers that aren't exactly sure what they need.
One of Azure's portfolio companies, Education.com, seeks to mitigate this problem by offering parents a subscription-based model that offers workbooks and other educational products, billed on a monthly basis.
"The companies that are curating--and it's in a number of categories--they have an expertise, and they have subscribers who have loosely commited to buying every month," he says. "The company that curates it presents them the things they they think are the right things for them. It's gotten to the point of more personalized curation."
6. More companies will consider a freemium model | Pete Moran, general partner, DCM
Freemium has become the accepted business model in a few verticals, most notably gaming. In gaming companies, players download a game for free but spend money on virtual goods. But Moran, a general partner at DCM who specializes in online gaming, semiconductors, components, and cleantech, believes more verticals will adopt this model.
"We've seen a trend in the move towards freemium," he says. "But the interesting thing in 2012 has been the move into other industry verticals. For instance, wireless services. We're used to paying Verizon and At&T for our wireless data, but now you see companies like FreedomPop down in LA that have come up with free wireless data."
7. B2B will finally become sexy | Jeff Clavier, founder and managing partner, SoftTech VC
The flashiness of Facebook and Groupon as consumer-facing companies might still excite some entrepreneurs and VCs, but Clavier says he's more excited about companies most people might find boring B2B software start-ups.
"Over the past 6-to-12 months, we've started to do more B2B deals," says Clavier. A year ago, Clavier was doing about 60 to 70% of his deals in B2C companies. For 2013, he predicts that ratio will flip.
The companies he's investing in, he says, are typically "vertical solutions in what we'd call boring or unsexy activities such as B2B sales automation. SaaS for IT. Things that people would typically yawn at, versus the more shiny B2C start-ups."
Clavier isn't scared of big-brand competition from companies like Salesforce, or IBM, either. "There has been a lot of progess since Salesforce was launched," he says. "And if you look at Salesforce, it's not the prettiest user interface. You can feel its age. And the software is very speicific and there are other areas of the food chain."
One company Clavier is particularly excited about is Farmeron, a farm-management platform (yes, you read that correctly) to help farmers manage inventory and purchase decisions.
"It's crazy," Clavier says, "but it's a massive opportunity."
